Woolworths good sales growth story continues

Posted by AFN Staff Writers on 10th February 2014
Woolworths good sales growth story continues

Woolworths Limited on 6 February 2014 released its sales results for the first-half of the 2014 financial year (27 weeks to 5 January 2014) with key figures showing that group sales from continuing operations (excluding petrol) grew 5.8% to $28.2 billion.

Sales for the second quarter from continuing operations were $16.2 billion, an increase of 5.9% on the previous year.

Online sales continued their big growth trend with more than 40% growth for the 6-month period and online sales having reached $1 billion for the 2013 calendar year.

Woolworth’s CEO Grant O’Brien said: “This first half sales result was a strong and positive reflection of the four Strategic Priorities that have shaped our focus over the last two years. The first priority, and the central theme of our focus, has been to ‘extend our leadership in Food and Liquor’.

“The improvement in the growth rates for our Food and Liquor business demonstrates the transformation that is underway. “Successful Christmas trading in Australian Food and Liquor helped to deliver sales growth of 4.8% for the half year as well as increases in market share, customer numbers, basket size and items sold. Customers enjoyed the benefits of our market leading positions in price and range,” O’Brien said.

Supermarkets division

This all-important division includes the Company’s Australian Food and Liquor and New Zealand Supermarkets and Petrol. The Australian Food and Liquor segment showed the sales had increased by nearly $1 billion, or 4.8%, to $21.5 billion, with comparable store sales up 3.4%.

The Company reported that the Australian part of this business division benefited from increased market share, customer numbers, basket size, items sold and sales per average square metre.

During the 27 weeks to 5 January 2014, Woolworths opened 26 and closed three Australian supermarkets bringing the total to 920 stores. Six Dan Murphy’s liquor retail outlets were also opened which brought their total to 181 stores. In the remaining six months of the financial year, management plans to open 14 (net) supermarkets and six more Dan Murphy’s.

General Merchandise

Adjusting for timing issues related to the Big W annual Toy Sale, sales in this division increased by only 0.2%. Comparable store sale figures showed a poor result after adjusting for a rationalisation program.

Hotels – Pubs and Gambling

One new hotel was opened during the half to bring the total number of Woolworths-owned hotel business venues to 327. Sales increased by 3.8% to $788 million, with comparable sales up 2.1%.

Home Improvement – Masters chain

Woolworths’ Masters chain continues to struggle to compete against the Wesfarmers Ltd -owned Bunnings chain which is highly profitable. The American chain Lowes is Woolworths’ joint-venturer in the Australian Masters business operation and there have been criticisms of management for insufficient understanding of the Australian-specific needs of the Masters market for home improvements such as a lack of appreciation of climatic differences, seasonal timing differences, and very different or unique Australian customer and business wants or product needs that distinguish the Australian and American markets.

Nonetheless, sales at Masters increased by 49.4% with seven new stores opened taking the total to 38 Masters’ stores.