RetailBiz Round Up for Friday 28 February 2014 – with Patrick Avenell
oday's ASX results are here

Woolworths Limited today announced its results for the six months to 31 December 2013. The total group had sales of $31.8 billion, up 3.8 per cent on the previous corresponding half year and a net profit after tax of $1.3 billion, up 14.5 per cent.

Breaking down the results by business group shows that food and liquor remains the company’s biggest strength, growing 6.8 per cent in earnings before interest and tax (EBIT) for the period. Woolworths’ burgeoning Hotels business continues to reap rewards, growing 16.4 per cent to almost $164 million in EBIT.

General merchandise sales is suffering, however, declining 6.9 per cent, though still a profitable venture with EBIT of $120.5 million. Hardware, however, remains a trouble spot for the company: Masters lost another $71.9 million, completely overshadowing the modest $7.5 million in EBIT achieved by the Home Timber and Hardware brand.

Woolworths’ New Zealand operations grew 9.7 per cent in EBIT to $136.8 million.

“Woolworths remains well-positioned in its market segments and has a strong and sustainable business model,” the company said, discussing its outlook. “We previously provided guidance for FY14 net profit after tax from continuing operations to grow by 4-to-7 per cent.

“Whilst some of our businesses continue to experience challenging trading conditions, we have seen good progress against our strategic priorities, which have delivered sustainable profit growth for [the first half of FY2014].”

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Harvey Norman also announced its results for the first half of the 2014 financial year. Claire Reilly at AR has the story:

A strong performance across its chain of company-owned stores and improved conditions abroad have boosted Harvey Norman’s fortunes with the company posting strong half-yearly results today for the six months ended 31 December 2013.

While global sales revenue from Harvey Norman’s 202 franchised stores only edged up slightly (up $35.28 million, or 1.9 per cent, to $2.48 billion for the six months), revenues from Harvey Norman’s 81 company-operated stores climbed by almost three times that amount, up $100.03 million to $776.96 million (an increase of 14.8 per cent).

Across the company, earnings before interest and tax almost doubled to $178.25 million (up 44.9 per cent year-on-year) while profits (after tax and non-controlling interests) were up 36 per cent year-on-year to $111.42 million. Global sales increased 4.9 per cent on a like-for-like basis to $2.99 billion.

“We achieved a strong increase in profit in an environment where consumer spending growth was modest,” said chairman Gerry Harvey. “This improved performance reflects sound strategic decision-making across our business and growing traction from our omnichannel strategy.

“Our property portfolio continues to underpin the Harvey Norman business through the strength and stability it provides. We have more than doubled our net asset base in the last nine years and our property assets have provided a solid foundation to our integrated retail, franchising and property system for more than three decades.”

The Retail Food Group (RFG) also joined in the fun today, announcing an 8 per cent increase in revenue to $64.6 million and a record net profit after tax of $17.3 million.

RFG owns the franchise systems for Donut King, Brumby’s, Michel’s, Pizza Capers and Crust Pizza, amongst several other smaller brands. All told, RFG has 1,401 franchised outlets currently in the market.

“The solid foundations laid for the company, notwithstanding ongoing retail uncertainty and the differential growth maturity profiles of the Brand Systems, continues to position RFG as a proven performer well able to deliver all stakeholders superior outcomes on a sustainable basis,” said chairman Colin Archer.

RFG reports that acquisitions remain “a central pillar” of its growth strategy and the company is currently investigating a number of such business purchases.

A Hong Kong investor has purchased the QBE tower in Sydney for $46.5 million. “The sale of 80-82 Pitt Street reflects the emerging trend of Hong Kong buyers seeking CBD offices in Australia, predominately developers looking for commercial offices which can be slated for residential use,” said property consultant and deal negotiator Knight Frank.

Muffin Break is giving one lucky customer the chance to win 365 cups of coffee – one per day for a year – via a social media competition.

“The competition entry form asks people to build their daily cup of coffee, sharing their preferred size, style, milk and strength. Once complete, entrants receive an image of their daily cup, which they can share with family and friends via Facebook, Twitter and Google+,” the company said. I drink my coffee black so I can generate by daily cup image simply by turning off my computer monitor.

Quote of the Day

“Retailers have had to bare the brunt of this new law, facing a variety of additional costs including costs associated with staff training, labour, product handling errors, increased inventory management procedures and customer frustration. How does making customers less aware of what they are purchasing help in any way? Plain packaging has already resulted in significant customer frustration and this simply exacerbates the problem for no health gains."

Jeff Rogut, chief executive of the Australian Association of Convenience Stores, hits out against a potential law banning the display of tobacco prices.

Image of the Day

See all those specks in this image? They're books! This is a sneak peak inside the distribution centre. The American retailer is set to take on the Australian market so click on the image above to get a closer look at what local retailers will soon be competing with on a much more localised scale.