Woolworths has produced a “sound result” with a full year profit increase of 5.1 per cent to June 30.
Net profit rose from $2.04 billion to $2.12 billion from the previous year while revenue increased 4.9 per cent to $54.51 billion.
“Woolworths is well positioned in all its market segments and has a strong and sustainable business model geared towards the less discretionary retail segments,” the company said in a statement.
Australian Food & Liquor sales for the year were $36.2 billion, an increase of $1.5 billion where the company continued to focus on meeting customer needs by improving ranges, formats, and merchandising across all brands.
“We invested strongly in price by leveraging the capability of our business model and as a result our business grew market shares, sales and profits. We served an additional 42.6 million customers (up 3.2%) reflecting the growing strength of our brands,” CEO Michael Luscombe, said.
But things weren’t so great for Big W as sales for the year decreased 0.8 per cent over the previous year as trading was impacted by tightened consumer spending and significant price deflation. This resulted from the strong Australian dollar, with cost price reductions passed onto the customer. Deflation for the year averaged at 6 per cent and was particularly strong in home entertainment and apparel.
In the company’s consumer electronics division, total sales increased by 2.1 per cent while trading does continue to be impacted by tightened consumer spending and significant price deflation in key products.
The comparable store sales for the full year for Dick Smith stores (excluding Tandy and ex Powerhouse) grew 7.1 per cent. This reflects the continued roll out of our refreshed Dick Smith offer, which has driven market share growth in key categories. The new format stores continue to grow sales at a greater rate than the older format.
From this, Woolworths plans for future growth, through expansion into the circa $40 billion home improvement market, it anticipates start-up costs for Masters of up to $100 million, which will impact its overall earnings in 2012 financial year.
“Therefore we expect a year of further earnings growth in FY12 with net profit after tax expected to grow in the range of 2 to 6 per cent,” the company said.