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Woolworths increases profit by 12.5 per cent

MELBOURNE_SQUARE_WOOLWORTHS_SUPERMARKETWoolworths Group has increased its net profit after tax by 12.5 per cent year over year, reaching $1.7 billion for the FY18 period.

Group sales from continuing operations rose 3.4 per cent to $56.7 billion, while basic earnings per share rose to $1.23, an 11.4 per cent increase.

Woolworths Group CEO Brad Banducci said the group’s focus on putting customers first remains at the core of what the group does.

“All businesses saw an increase in customer satisfaction and traffic (transactions) during the year. This has led to strong sales and EBIT growth and a significant reduction in net debt, even as we invest in strategic initiatives focused on delivering sustainable growth int4o the future,” said Banducci.

“Having fixed the basics, our focus is shifting to being ‘consistently good’ at the fundamentals and creating meaningful shopping differentiations in the eyes of our customers.”

Banducci noted the group’s intentions to leverage data and digital to transform its businesses and deliver sustainable growth for shareholders.

Woolworths Supermarkets saw a 4 point rise in overall customer satisfaction for the month of June, reaching 81 per cent, alongside a 3.6 per cent rise in transactions in the fourth quarter and 4.2 per cent rise in the year.

The year saw the completion of 80 renewals, including 11 new stores, and 54 upgrades, including the Marrickville Metro and Plumpton and Lakemba concept stores.

The year also saw the reformulation and rebranding of FoodCo and Metro Woolworths (previously Select) and Essentials (previously Homebrand), with over 5000 products materially improved.

Comparable sales grew in double digits for Metro stores, and a new alliance with Caltex will see 250 Metro stores opened on Caltex sites over the next six years.

Woolworths also stepped up its investment in WooliesX, its digital hub, opening new customer fulfilment centres in Sydney and Melbourne to improve home delivery experiences, and increasing loyalty program members to 10.9 million by the end of June.

Over 2900 stores, including supermarkets across Australia and New Zealand, Dan Murphy’s, BWS and Big W, now offer buy online, pick-up in-store options.

Woolworths’ Endeavour Drinks business saw increased comparable sales by 3.6 per cent. Sales growth remained robust in the second half of the financial period, though EBIT growth was lower due to increased price competition impacting Dan Murphy’s.

While the group claims BWS is leading in on-demand delivery, it noted there is more work to do to position its drinks business for medium-long term growth through digital, range, service and convenience.

“Big W progressed its turnaround in FY18,” said Banducci.

“Prices are significantly more competitive than this time last year, the majority of stores have been refreshed and the range is beginning to resonate with customers.”

Comparable sales for the department store rose 0.9 per cent for the period, the first increase since FY09, however the business saw a loss before interest and tax of $110 million.

“In FY19, we expect a further reduction in losses as we continue to build momentum in the business but, as always, financial performance will depend on trading over the key Christmas period,” said Banducci.

Banducci noted the group was pleased with the progress made in FY18 and “remained energised by the material opportunities we have to create a better business for our customers, team members and shareholders in the future”.

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