Woolworths Ltd CEO Michael Luscombe today (27 August) praised the progress Australia’s largest retailer has made in growing sales in New Zealand but said more work needed to be done.
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Woolworths crossed the Tasman in 2005 with the A$2.5bn (US$2.1bn) acquisition of Foodland Associated’s New Zealand assets and has spent the last three years “repositioning” the business.
An overhaul of the New Zealand business’s systems, buying, a focus on fresh products and the roll out of a private-label offering have all formed part of what Woolworths has labelled a “transformation” of its operations in the country.
Woolworths saw EBIT from its New Zealand business grow by 4.1% to NZ$208.1m (US$141.7m) but Luscombe said operating earnings in the second half of the fiscal year climbed by more than 17%.
“The financial result for New Zealand in a half when the New Zealand economy really hit the bottom …. was a great result,” Luscombe said.
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By GlobalDataSales rose 3.9% to NZ$4.96bn while Woolworths said comparable-store sales growth was “solid” at 3.6%.
Luscombe said Woolworths’ management in New Zealand had succeeded driving efficiency from its supply chain and improving stock availability but the business needed to press on with the refurbishment of its store chain. Some 23 outlets are set for an overhaul, Luscombe said.
However, he added: “We’ve built the basis of a good, sustainable business in New Zealand but we’re not declaring victory just yet. Last half was a really great start. We’re confident we’re going to have a really good year in New Zealand this year but we’ve got a long way to go.”
Earlier today (27 August), Luscombe hailed the strength of Woolworths’ total business after company’s “record” annual results.
Woolworths booked a 12.8% jump in net profit after tax to A$1.84bn for the year to 28 June.
EBIT increased 13.4% to A$2.53, while turnover climbed 7.5% to A$49.6bn. Sales excluding fuel rose 8.5%.
