Woolworths lifts profits

Published on Mon, 23/07/2012, 02:50:30

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Woolworths has overcome a series of difficult trading, lifting its total group sales by 4.7 per cent to $56.7 billion for the 2012 financial year.

CEO Grant O’Brien said the results have been underpinned by continued growth in customer numbers, market share and units sold.

“The last quarter in particular was a stronger end to what was a challenging year. Retail conditions remained subdued due to customer and business uncertainty and unseasonably cold and wet summer period. The impact of this was exacerbated by significant deflation,” he said.

“Importantly these results have been achieved at a time when our customers are benefiting from lower prices due to strong competition and continuing deflation across our businesses. This confirms the resilience of our business as we continually adapt to the changing economic environment.

“There is a lot of hard work ahead, but with a lot of upside as well.”

Despite experiencing significant deflation in produce prices as supply improved and the cycle of high prices as a result from natural disasters in the prior year, the company’s main division Australian food and liquor increased sales by 3.8 per cent to $37.5 billion.

“As the fourth quarter progressed, these initiatives resulted in improving comparable sales growth despite the significant deflation experienced in produce,” Tjeerd Jegen, managing director o Australian supermarkets and petrol, said.

Meanwhile, Big W saw a 0.5 per cent increase to $4.1 billion. The areas that performed well in the fourth quarter and the second half of the year included womensewear, footwear, menswear, toys and sporting.

According to the company, the lift was due to the increase in customer numbers and items, reflecting on strong brand proposition, offering the lowest prices on the widest range of quality and branded merchandise every day.

“The second half result has seen improved performance with both total and comparable sales being positive, reflecting the relevance of our offer for today’s customer,” Julie Coats, Big W director, said.

“There was additional uplift in sales in the last five weeks of the year as a result of the government assistance programs. Areas that traded well include everyday essential items across the store, in particular across the apparel areas, as well as the Apple iPad.”

The most momentous increase was recorded by Woolies’ home improvement division at 24.7 per cent to $828 million.  The results include sales from the first 15 Masters stores, which were delivered as planned, five of which opened during the fourth quarter.

“The customer response to our new Masters stores continues to be very positive as more stores are rolled out across the country. We now have stores in Western Australia, Victoria, New South Wales, Queensland and ACT, with a store opening in South Australia in the near future,” Don Stallings, chief executive officer home improvement, said.

“Stores continue to perform well and the launch of Australia’s first online home improvement store through the Masters transactional website is enabling us to reach more consumers with the masters offering. We will be increasing the range offered online going forward to further improve the customer offer.”

While there were no further details released about the sale of Dick Smith, the company reported that consumer sales for its electronics division increased 2.1 per cent to $1.3 billion for the year and 10.4 per cent for the fourth quarter.

“Despite the tough economic times, we will continue to invest in developing new stores, building our multi-option infrastructure and building new businesses like Masters, which will benefit the whole community through additional jobs and economic growth,” O’Brien reinforced.


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