Supermarkets shine in strong Woolies financial year result

Jon Condon, 31/07/2013


Woolworths’ supermarket division was the company’s star performer in full-year financial results released yesterday.

While sales growth performance in the company’s petrol, Big W and Masters home improvement divisions was more modest, the flagship Australian Food and Liquor division performed strongly, notching-up sales worth just over $40 billion for the full financial year ended June 30.

That represented an increase of 4.7 percent compared with the previous 12 months, when adjusted for a 53rd week present in the calendar this year.

Sales for the fourth quarter, from April 1 to June 30, were 4.4pc up on the same period a year earlier, when adjusted for Easter.     

Over all divisions, Woolworths Ltd produced sales from continuing operations last year of $58.5 billion.

Chief executive Grant O’Brien said the progress made in the 2013 financial year in transforming Woolworths Ltd had been rewarded with a strong sales result.

Momentum continued to increase in the Australian Food and Liquor division, with comparable sales growth for the second half higher than the first half, and the prior year.

“The solid full year sales is particularly pleasing when measured against challenging retail conditions and an economic environment underpinned by consumer uncertainty and low growth in disposable income,” Mr O’Brien said.

He told a briefing Woolworths was not looking to raise prices to boost margins, but would put greater focus on targeting customers with marketing campaigns like the “More savings every day” promotion.

“We now know more about what our customers want than ever before and we are doing more to meet their needs,” he said.

In the Food and Liquor division, market share, customer numbers and basket size all increased compared with the prior year.

Woolworths managing director of Australian Supermarkets, Tjeerd Jegen, said the company’s fresh food departments, including meat, produce and seafood had performed particularly well, in line with the company’s strategy to extend its leadership in fresh foods.

“The launch of our ‘More Savings Every Day’ marketing campaign at the end of the fourth quarter has been well received by customers with hundreds of prices reduced on branded and own-brand products that customers buy the most.”

“This is one of many examples of how we continue to provide more savings for our customers as evidenced by the continued decrease in our average prices,” Mr Jegen said.

Average prices experienced deflation of 2.9pc for the year and 3.5pc for the fourth quarter when the effects of promotions and volumes were included.

Woolworths opened 34 new supermarkets across Australia during the year, including 13 in the fourth quarter, bringing the total number of stores to 897.


Hotels division continues to expand

Woolworths' ALH Hotel division sales for the year reached $1.5 billion, an increase of 19.7pc, due mostly to new acquisitions. Comparable sales for the year increased 10.5pc.

The result reflected ALH’s focus on developing ‘family friendly’ features in hotels including an improved food offer in terms of quality and value, CEO Bruce Mathieson said.

ALH added 35 hotels to its business during the year, bringing the total number of venues to 326. More than 270 of these outlets include steakhouses serving ALH’s own ‘Graziers’-labelled 60-day minimum grainfed steaks.

Woolworths also recorded strong online sales growth last financial year, with sales from continuing operations increasing 38pc adjusted for the year.

“It is an important growth engine across our business as customer shopping preferences evolve,” Mr O’Brien said.


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