Woolworths' strong first half 5% increase

Published on Tue, 31/01/2012, 03:00:32

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Woolworths has produced what has been described as “solid” half-year results with sales reaching $29.7 billion, a 5 per cent increase on the previous year.

Chief executive Grant O’Brien said considering the ongoing difficulty the retail sector is facing the result is a positive one.

“The first half results include a 5.6 per cent growth for our supermarket division, as well as sales growth of 16.4 per cent in our home improvement division that includes sales from our first seven Masters stores, which are trading in line with expectations. Overall customer numbers have increased, reflecting improved customer buying power through price deflation,” he said.

Its food and liquor division’s sales for the first half year were $19.6 billion, a 4.3 per cent increase over the last year. Sales for the second quarter were $9.9 billion, an increase of 4.1 per cent.

According to the company, sales growth was impacted in the second quarter by significant deflation particularly in produce, seafood, bakery and deli. Also, sales growth was dampened in the second quarter by cooler weather with the lowest December Australia wide temperatures since 2001. The impact was greatest in lines as soft drinks, ice cream and deli items including salad, cold meats and roast chickens.

Average prices continued to experience deflation for the half year of 3.7 per cent when the effects of promotions and volumes are included. Average prices for the second quarter decline 4.1 per cent. Part of the deflation results from Woolworths lowering its prices to meet increasing customer demand for value.

Tjeerd Jegan, director of Australian supermarkets and petrol said despite these impacts the company continues to invest in price which has in turned boosted customer numbers, basket size and items sold.

“Fresh food continued positive sales momentum, led by bakery, deli and meat, and we continue to see strong results from our new season launches. Grocery market share increased over the half however we are focused on further improving the growth momentum in the category,” he said

Positivity was also seen in the company’s home improvement store where six out of the seven Masters stores were opened in the first quarter. Sales in that division increased 16.4 per cent to $412 million for the first half and increased 26.6 per cent to $224 million for the second quarter.

Also, while half year sales for BIG W were down 1.3 per cent to $2.4 billion and sales for the second quarter were $1.3 billion, customers continue to respond positively to its ‘Get it for Less’ marketing campaign.

Price deflation continued at an average 5 per cent during the first half and was most evident in home entertainment and toys.

“Trading over the Christmas period was pleasing with positive customer and unit growth in December offset by deflation resulting in lower than average basket sizes. Strong results were achieved in DVDs, books, sporting and footwear whilst cooler weather in December had a modest effect on apparel and outdoor categories,” Julie Coates, Big W director, said.
 


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