Big W profit hit by store closures
Woolworths Group has lifted full-year profit from continuing operations by 7.2 per cent to $1.75 billion for the full-year, finishing strong with increased sales reported across its supermarkets.
Group CEO Brad Banducci said the company made “good progress” on its transformation across all businesses.
Group statutory profit lifted 56.1 per cent to $2.69 billion, helped by the $1.7 billion sale of its petrol business. Normalised revenue for the year grew by 3.4 per cent to $59.98 billion.
Woolworths supermarkets regained momentum after a tough first quarter, which saw the removal of single‑use plastic bags and rival Coles launch its successful Little Shop collectables campaign.
Comparable food sales at Australian supermarkets increased by 3.1 per cent for the full-year, while a successful Lion King collectables program boosted comparable sales for the first eight weeks of FY20 by 7.5 per cent.
Online sales grew by 31 per cent in Woolworths, helped by the scale up of its Pick Up and Drive up services, as well as the launch of on-demand delivery in 38 stores.
Woolworth Group’s New Zealand supermarket Countdown had a strong second half with comparable sales growth of 3.6 per cent. The establishment of CountdownX helped the supermarket deliver strong online sales growth of 40 per cent.
Woolworths Group’s discount department store Big W saw sales improved 4.2 per cent to $3.8 billion, and online sales improve 128 per cent – driven by click-and-collect.
The business reported a loss before interest and tax of $85 million – within recent guidance estimates of between $80 and $100 million, and an improvement over the $110 million loss seen last year.
However, a significant items cost of $371 million levelled against the business due to the store and distribution centre closures pushed its loss down 313.7 per cent to $456 million.
Drinks arm Endeavour saw improved sales growth in the second half, with comparable sales increasing by 4 per cent, versus 0.7 per cent in the first half.
Dan Murphy’s delivered double-digit online sales growth with on-demand delivery now available from 91 stores and 30 minute Pick Up from all stores.
In July, Woolworths announced plans to merge Endeavour Drinks with it hospitality business ALH, to be followed by a demerger or “value accretive alternative” in the 2020 calendar year.
“We are pleased with the progress we made during the year and have exited F19 with good momentum across the Group,” Banducci said.
“In F20, we expect the uncertain consumer environment and input cost pressures to remain as well as an impact from new enterprise agreements. However, we are well placed to respond to these challenges and are excited about what we can achieve together in F20,” he added.
This is an edited version of a story that appeared on Inside FMCG.
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