Promise of Spring as Woolworths Group quarterly results show successes in key areas

Posted by AFN Staff Writers on 31st October 2016
The Food and Grocery Code of Conduct came into effect 16 June 2015 with Woolworths and Aldi the first major players to sign on.

The Food and Grocery Code of Conduct came into effect 16 June 2015 with Woolworths and Aldi the first major players to sign on.

Woolworths Group Ltd (WOW) has reported its results for the September quarter of FY17 to the ASX.

The results show that the company’s performance is markedly stronger than in the corresponding quarter in FY16.

Woolworths Group CEO, Brad Banducci, said, “We made good progress during the quarter on our five key priorities and are seeing far more consistency in our trading performance in Australian Food.”

  1. Food sales buoyant despite price deflation

Australian food sales have grown by 1.7 per cent over the September quarter of FY16 to AUD $9.3 billion. This represents a marked improvement over the negative growth in the September quarter of FY16.

Comparable sales increased by 0.7 per cent driven by a 2.5 percent increase in comparable transactions and 0.5 per cent growth in comparable items.

Average prices declined by 1.9 per cent including tobacco. Excluding tobacco, the decrease in average prices was 2.8 per cent.

The total number of items on the “Price Dropped” and Always” programs has grown by more than 600 to 2230 items.

New Zealand food sales have shown growth of 8.1 per cent when measured in Australian dollars but only 1.9% measured in New Zealand dollars reflecting the strengthening of the New Zealand dollar against the Australian.

During the quarter, the group has opened two supermarkets and closed three, total 991. In the same period one Thomas Dux store was closed bring the total to four.

  1. Price pressures depress Fuel results

Petrol results have depressed the overall figure: sales revenue has fallen 11 per cent compared to the September quarter last year but the volume of petrol (litres) has fallen by only 1 per cent.

This was the result of a 13.9 per cent reduction in average fuel sell price to 113.2 cents per litre.

The total number of petrol canopies has remained unchanged at 530, but during the quarter, one closed and another opened.

  1. Endeavour Drinks Group remains bubbly

During the quarter, results for Woolworths Liquor and Beverages division (Endeavour Drinks Group) showed growth was slowing.

Growth has slowed: 3.8 per cent in the September quarter of FY17 compared with 5.4 percent growth in the corresponding quarter of FY16. Comparable sales growth has likewise slowed; 1.8 per cent compared with 2.4 per cent.

Since June 2016 three new Dan Murphy’s stores were opened to bring the total to 210, while total BWS stores grew to 1283, with five closures and nine openings.

  1. BIG W reduces

Total sales of AUD880 million was a decrease of 5.5 per cent over the corresponding quarter last year which was itself an 8 per cent decrease on the September quarter of FY2015

Comparable sales decreased by 5.7 per cent: this was impacted by significant SKU reductions and clearance activities in deleted lines.

Deflation increased to 3.7 per cent in the quarter compared to September quarter FY2016. This is well below the 6.2 per cent deflation in the June quarter ofFY16.

The number of BIG W stores has remained unchanged at 186.

  1. Hotels trading steadily

Hotel revenues compared to the corresponding quarter in FY16 increased by 2.9 per cent while comparable sales increased by 2.1 per cent.

Two venues were closed bringing the total  number of hotels owned by Woolworths Group to 329.

  1. Divestment of Home Improvement businesses on target

Woolworths no longer reports sales from the Home Improvement business.

The sale of Home Timber and Hardware was completed on Sunday 2 October 2016 and the sale of Masters’ inventory is proceeding well.

Progress towards implementing the transaction with Home Consortium is continuing.

 

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