Woolworths Resurrects with $1.5 Billion Profit

Woolworths has reported a $1.53 billion full-year profit, with a 3.6% increase in critical comparable food sales, signifying that heavy discounting on groceries is luring customers back to the supermarket giant.

Woolworths has resurrected from last year’s $1.23 billion reported loss as it exited its Masters hardware business. Woolies’ comparable supermarket food sales increased by 6.4% in the fourth quarter, outperforming its rival Coles for a third consecutive quarter.

“Australian Food sales increased by 4.5% over the year with the fourth quarter the strongest at 7.2% (Easter adjusted). Comparable sales increased by 3.6% for the year and 6.4% Easter adjusted in the fourth quarter,” said Woolworths Group’s chief executive, Brad Banducci.

“Woolworths supermarkets sales growth continues to be driven by customer transactions with an increase in the number of items per basket also assisting in the second half,” said the company in a statement release.

However, despite a 3.7% rise in sales to $55.5 billion, underlying earnings (excluding one-off write downs and gains) fell almost 4% to 1.4 billion, which was slightly behind what analysts expected.

Banducci says the company is still its turnaround phase, which includes focusing on “digital and insights” – only a couple months back Woolworths unveiled it new online store which it confirms is still in its testing phase, as it continues to refine the platform.

“We are moving from a turnaround phase, focused on fixing our business foundations, to a transformation phase, focused on leveraging team work, digital and insights to materially improve our business,” said Banducci.

Woolworths’ discount department store Big W has continued its weak performance, reporting a pre-tax earnings loss of $150.5 million with Banducci warning it would not improve in a hurry.

“Financial year 2018 will continue to be a year of investment for Big W and we do not expect a reduction in losses as we continue to invest to improve the customer shopping experience, including re-establishing price trust,” he advised in the report.

The company says that Big W’s turnaround plan has received board approval, with implementation underway, with its new managing director and executive team in place.

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