Woolworths reports ‘momentum’ and growth in third quarter

Posted by AFN Staff Writers on 5th May 2014

Woolworths has announced continuing momentum for the third quarter
Australian supermarket group Woolworths has announced sales from continuing operations of $15.2 billion for the third quarter of the 2014 financial year — an increase of 5.3 per cent on the previous year or 5.9 per cent after adjusting for the impact of Easter.

Woolworths said Easter falling into the fourth quarter this year had created significant timing and trading differences when compared to the third quarter of the 2013 financial year.

“Trading patterns and momentum for the third quarter were similar to the first half of the 2014 financial year and continue to refelct our ongoing focus on the four Strategic Priorities that are transforming our business for the future,” said Grant O’Brien, Woolworths CEO.

‘Pleasing’ momentum in Australian Food and Liquor business

Woolworths said ongoing momentum was evident in its Australian Food, Liquor and Petrol business, with sales increasing 4.6 per cent on the previous year, or 5.1 per cent when adjusted for Easter.

The Company said this momentum was evidenced through market share growth and demonstrated success in its work on its first Strategic Priority ‘to extend leadership in Food and Liquor’. Woolworths reported Fresh sales and market share grew faster than Grocery.

“Customer insights are enabling tailored offers and loyalty rewards based on individual shopping preferences,” Mr O’Brien said. “We continue to provide the most compelling offer to our customers by delivering unbeatable value and a shopping experience which increasingly caters for individual needs,” he said.

“The ‘More Savings Every Day’ program continues to reinforce our value proposition as customers benefit from lower average prices, as evidenced by price deflation of 2.9 per cent when effects of promotions and volumes are included,” Mr O’Brien said.

Petrol volumes decrease

Woolworths said petrol volumes decreased on the previous year, reflecting changes in the level of promotion activity. However, sales increased 5.5 per cent on the previous year, or 5.1 per cent when adjusted for Easter, with forecourt improvements and an “enhanced merchandise offer” continuing to deliver positive results.

Online sales increase 50 per cent

Woolworths said its online sales increased by more than 50 per cent in the third quarter of the 2014 financial year, which it said reinforced its “multi-option leadership” in Australian Food and Liquor.

“Click and Collect sales across the Group increased by more than 100 per cent as we build stronger platforms to give customers an additional choice in how they choose to shop with us,” Mr O’Brien said.

New Zealand Supermarkets’ sales increase

Woolworths’ New Zealand Supermarkets business saw sales increase 0.1 per cent on the previous year (16.2 per cent in Australian dollars), which the Company said reflected “subdued grocery market conditions, a highly competitive marketplace and price deflation across a number of categories”.

General Merchandise impacted by Big W

Woolworths said General Merchandise sales continued to be impacted by the business transformation of department store Big W, as well as challenging trading conditions, ongoing price deflation and continued promotional activity.

“We recently announced the appointment of Alistair McGeorge as the new Managing Director of Big W,” Mr O’Brien said. “Alistair brings 20 years of senior management experience in General Merchandise and Apparel retailing and is well placed to take Big W through its transformation process. Alistair will commence in June 2014,” he said.

Hotel sales increase

Hotel sales increased 1.1 per cent on the previous year, or 0.6 per cent when adjusted for Easter. Woolworths said trading conditions varied by geography with Victoria and Queensland “continuing to be challenging”.

Home Improvement business growing

Woolworths said its Home Improvement business sales increased 29 per cent on the previous year, with 45 Masters stores now trading. Seven new Masters stores were opened during the third quarter and Woolworths said it remained on track to open 18 stores in the 2014 financial year.

Network expands

“We expanded our network, adding an additional 29 sites across our portfolio during the quarter and are on target to meet our projection of creating almost 7,000 new jobs in the 2014 financial year,” Mr O’Brien said.

“We are very focused on the final quarter of the financial year and continuing the momentum generated in our business through successful execution of our Strategic Priorities,” Mr O’Brien said.