lf, continuing its powerful turnaround with earnings before interest and tax (EBIT) of $133 million, up 166 per cent.  Woolworths CEO Brad Banducci attributed this growth to strong sales, gross margin improvements and good cost control despite higher Covid-related costs.  “Big W had a very strong half with all key metrics improving, including positive momentum in customer metrics [and] sales growth of 20.1 per cent,” Banducci said on Wednesday morning.  “Sales increased in all destination areas and were buoyed by seasonal sales events such as Halloween, Click Frenzy, Big Sale (Black Friday) and Christmas.” E-commerce sales at Big W increased by 120 per cent, with penetration of 9.5 per cent in the half.  “Ultimately, Big W had misstepped and failed to respond several years ago to a reinvigorated Kmart under Guy Russo’s leadership, and then consistently delivered pretty poor results for several years,” said Gary Mortimer, a professor of marketing and consumer behaviour at Queensland University of Technology. “I think their strategy of right sizing that fleet [helped the turnaround]… They’ve made very conscious decisions to simplify their range and really invest heavily in those private label ranges, similar to a Kmart and a Target strategy.” Dining-in continues to drive supermarket sales Supermarkets continued to prosper, recording 10.6 per cent sales growth in the first half, ahead of Coles, which reported a 7.2 per cent lift in supermarket sales for H1 last week.  However, Woolworths noted that sales moderated gradually over the half with Q2 sales growth of 8.3 per cent.  “Strong growth in food and groceries has almost become the norm for the business,” Mortimer told Inside Retail. “In many ways, that’s being driven by Covid and that shift from eating out to eating in.”  In New Zealand, food sales increased by 4.3 per cent in the half but fewer international tourists resulting in muted growth of 1.8 per cent in Q2. E-commerce at Woolworths Group, powered by Woolies X, is continuing to make strides, with just under $3 billion in sales recorded over the last 12 months. In H1, e-commerce sales grew by 91 per cent to $1.8 billion, thanks to continued investment in online capacity. Three e-commerce fulfilment centres were opened in the half at Notting Hill, Lidcombe, and Carrum Downs, which is the first eStore to introduce Takeoff micro-fulfilment technology in the Southern Hemisphere.  In the second half of FY21, Woolworths plans to further accelerate digital as it becomes increasingly important to grocery shoppers.  “We have added significant e-commerce capacity across the Group over the last year which puts us in a strong position to meet our customers’ demands. As growth rates in the second half slow as we cycle peak Covid-demand, we have an opportunity to optimise e-commerce at scale and deliver further efficiency,” Banducci said.  Endeavour demerger set for June Endeavour Drinks is powering along with 19 per cent sales growth translating to 24 per cent EBIT growth, thanks to increased at-home consumption. Spirits and ready-to-drink products were the strongest performing categories during the half,  Demand for e-commerce services remained high, with sales growth of 50.2 per cent. The separation and demerger of Endeavour Group from the Woolworths Group has been set for June 2021. “Endeavor Group appears to be a profitable and viable business at the moment. It’s a very attractive business for other organisations to look at. I think they’ve set that particular segment of their business up really well for sale. I think we’ll see them do that in a similar way to what Wesfarmers did with the Coles Group,” Mortimer said.  Sales set to decline in Q4 Despite a strong start to the year, thanks to continued at-home consumption and Australians being unable to travel abroad, Banducci expects growth rates will continue to moderate and flagged a decline in sales.  “Looking ahead to the rest of the financial year, we expect sales to decline over the March to June period compared to the prior year in all our businesses, with the exception of hotels,” Banducci said.  “However, in parallel, we also expect Covid-related costs to be materially below the prior year, subject to no further widespread prolonged lockdowns.” Banducci also hinted at a renewed focus on ‘value’ at Woolworths in the second half. “We haven’t yet seen a material flight to value among our customers, but expect value to become more important over the next few years as we emerge from a period of unprecedented stimulus,” he said.  “Value means different things to different customers, so it is increasingly important that we personalise value for our customers. We aspire to do this by leveraging our various rewards programs and continuing to evolve our store propositions to provide the right range for the local community.”