A RECORD Christmas trading period saw Woolworths Group’s post first half sales increases of 10.6%, with its supermarkets, liquor outlets and Big W divisions all recording strong numbers, and online trading has continued to boom.
Group sales hit $35.85 billion, and e-commerce sales surged 77.9% to $2.94 billion.
Despite $277 million in COVID costs and weakened hotels earnings, the group’s EBIT grew by 10.5% to $2.09 billion, with net annual profit up 15.9% to $1.14 billion.
Earnings per security grew 16.1% to 90.5c.
Woolworths group chief executive, Brad Banducci said group sales for the first seven weeks of the current half have remained strong, benefiting from continued at-home consumption, Australians not travelling abroad, and a weaker prior year where sales were impacted by bushfires on the east coast.
However, growth rates have continued to moderate over the period in line with the overall market, he said, while COVID costs for the first seven weeks also continued to decline as restrictions ease. Sales are expected to decline over the March to June period compared to the prior year in all businesses, with the exception of hotels which were heavily impacted by COVID.
Woolworth’s Australian food division, which includes supermarkets, saw a 10.6% uplift in sales over the first half, with comparable sales up 9.3%. Online sale jumped 91.8% to $1.8 billion. However, its smaller Woolworths Metro stores were impacted by reduced foot traffic in city and transit locations, with sales declining by 6.7% to $456 million.
Big W’s profit was up 166% to $133 million, and sales were up 20.1%. Online sales growth was 120%.
Endeavour Drinks, which includes BWS and Dan Murphy’s, saw 9.5% growth in total sales and 8.9% in comparable sales. Woolworths also announced yesterday that its planned separation of Endeavour Group, which itself was the result of a merger between Endeavour Drinks and ALH Group early last year. The separation was postponed due to COVID but it now expected to take place in June, most likely via a demerger.
Sales in its hotels division fell 27.5%, and earnings were down 45%.
Banducci flagged an acceleration to digital.
“We have added significant e-commerce capacity across the group over the last year which puts us in a strong position to meet our customers’ demands. As growth rates in the second half slow as we cycle peak COVID-demand, we have an opportunity to optimise e-commerce at scale and deliver further efficiency.”
A new 3.8 hectare distribution facility in Melbourne’s west was completed in November and will be used for fresh produce, meats and chilled products.
Amid the battle for logistics supremacy in the supermarket sector, Woolworths is hoping to complete a $552 million acquisition of a 65% interest in the country’s second largest player in the food services market, PFD Food Services. However, the deal is currently the subject of an Australian Competition and Consumer Commission review, and multiple industry groups, including the Australian Convenience and Petroleum Marketers Association, Small Business Organisations Australia, the Master Grocers Association, the Australasian Association of Convenience Stores and Independent Food Distributors Australia, have combined in a bid to convince the regulator to reject the deal.
In a submission to the ACCC, Australia’s small business ombudsman wrote that allowing the deal to go ahead would be a “real kick in the guts” for smaller food distributors.
Woolworths’ major rival Coles recently announced it would increase its gross operating capital expenditure to $1 billion, including increased investment at its Witron ambient automated distribution centres.
