Woolworths has reported a 28.1% jump in first half profit, news which prompted Australia’s largest retailer to upgrade its full year guidance.
Interim net profit increased to A$695.6m (US$551.17m) from $543.1m for the comparable period of last year. Revenues were up 16% to $22.2bn.
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An overhaul of the retailer’s supply chain, direct sourcing from abroad and an increase in own label sales have cut Woolworths’ costs and allowed the retailer to reinvest savings in lowering prices. As a result, during the half the company benefited from market share gains from its nearest competitor – and the subject of recent buyout speculation – Coles.
The supermarket group said that it continues to cut costs by at least 20 basis points a year.
“This is a strong result,” Woolworths CEO Michael Luscombe said. “Further, our strategy continues to be successful in our core business; leveraging our strategic supply chain advantages across the Woolworths business; integrating and harvesting the planned synergies in the Progressive business in New Zealand; and continuing to lay foundations for further sustainable profitable growth.”
Woolworths said that it now expects to post 20-24% profit gains for the full year. It had previously predicted growth of 16-21%.
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