AUS: Woolworths sales gain on price focus
Woolworths sales in upward swing
Woolworths Ltd has said its focus on delivering low prices through its supermarket business allowed Australia's largest retailer to grow sales during the first half of its financial year.
The grocer said today (6 February) group sales rose 3.8% to A$30.8m (US$27.6m) during the 27 weeks to 5 February.
Supermarket sakes rose 6.2%, driven by a 15.2% increase in revenues from the New Zealand supermarket division. The New Zealand result was inflated by currency exchange and sales were up 2.6% in New Zealand dollars.
Sales from Woolworths' core Australian food and liquor business rose 4.8%, despite food deflation of 4.1%. CEO Grant O'Brien attributed the gain to Woolworths' commitment to delivering low prices through its "more savings every day" programme.
"Customers enjoyed the benefits of our market leading positions in price and range," O'Brien said. "The competitive market and value conscious shoppers are ensuring that we must continue to work hard to deliver the value that our customers seek."
First Half Year Sales Results - Financial Year 2014 27 weeks to 5 January 2014
Sales from Continuing Operations increased 6.0% for the half with a solid second quarter result, particularly in Australian Food and Liquor
Leadership in price and range delivered successful Christmas trading for Australian Food and Liquor
Achieved $1 billion of Online sales in calendar 2013
Woolworths Limited today announced financial year 2014 first half sales from continuing operations of $31.8 billion, an increase of 6.0% on the previous year. Sales for the second quarter from continuing operations were $16.2 billion, an increase of 5.9% on the previous year.
CEO Grant O’Brien said: “This first half sales result was a strong and positive reflection of the four Strategic Priorities that have shaped our focus over the last two years. The first priority, and the central theme of our focus, has been to ‘extend our leadership in Food and Liquor’. The improvement in the growth rates for our Food and Liquor business demonstrates the transformation that is underway.
“Successful Christmas trading in Australian Food and Liquor helped to deliver sales growth of 4.8% for the half year as well as increases in market share, customer numbers, basket size and items sold. Customers enjoyed the benefits of our market leading positions in price and range.
“We delivered savings of more than $400 million to customers predominantly through our ‘More Savings Every Day’ program. Our customers continue to benefit from lower average prices, as reflected by deflation of 4.1% for the half (when the effects of promotions and volumes are included). The competitive market and value conscious shoppers are ensuring that we must continue to work hard to deliver the value that our customers seek.
“Despite the competitive market, the underlying strength of our business has allowed us to continue to expand our store network, creating new employment in the communities where we operate. I am particularly proud that we created over 3,900 new jobs during the half, including 1,400 jobs for young people.
“New Zealand Supermarkets sales increased 2.6% for the half year, with the second quarter delivering the strongest reported comparable sales growth for the last 18 months. This was underpinned by successful promotional activity as well as strong results in Fresh with improved product availability.
“Petrol sales for the half year increased 8.0%, with forecourt improvements and our enhanced merchandise offer continuing to deliver positive results for the business.
“In General Merchandise, sales were impacted by differences in the timing of the BIG W annual Toy Sale relative to the reporting date and the early stages of our BIG W strategic repositioning, as anticipated. Trading conditions continue to be challenging with strong competition, ongoing price deflation and increased promotional activity leading to a disappointing 0.2% sales growth for the half.
“As previously communicated, we are focused on transforming BIG W for the future, an element of our second Strategic Priority to ‘act on our portfolio to maximise shareholder value’. We are aligning our focus to categories that are core to our customers to ensure this business is well placed to drive profitable growth in the future. We anticipate this will continue to impact short term sales.
“Hotel sales for the half year increased 3.8%, with the sales uplift from the Victorian gaming regulatory changes cycled during August. The second quarter therefore returned to a standard growth pattern, evidencing tougher trading conditions, particularly in Bars and Gaming.
“We have made significant progress on the third of our Strategic Priorities, ‘maintaining our track record of building new growth businesses’ with the half featuring strong growth in our multi-option business and progress in building our Home Improvement offer.
“Online sales exceeded $1 billion for calendar 2013, ahead of our FY14 target as our customers take advantage of increased flexibility in the ways they can shop. Online sales from continuing operations increased more than 40% for the half year and second quarter and featured strong growth within our Food and Liquor businesses as well as over the Christmas period.
“Home Improvement sales increased 25.0% for the half year, with 38 Masters stores now trading. We recently announced the appointment of Matt Tyson as the new Managing Director of our Home Improvement business, replacing Don Stallings.
“Our four Strategic Priorities are shaping the transformation and performance of our business and we are focused on continuing the momentum we have generated into the second half of the financial year.”
Original source: Woolworths Ltd
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