Big W On Track After Woolworths Results, Losses Drop 64%, Sales Up
Following an internal restructure and turnaround plan, Big W has posted a 64.4% decrease in half-year losses – from $27 million to $10 million – with same store sales also increasing in the later half of 2017.
The news comes after parent company, Woolworths, delivered a strong half-year earnings result, notching a 37.6% increase in net profit [after tax] to $969 million.
For the twenty seven weeks to December 31st, Big W’s sales saw a minor lift, climbing 1.1% to $2.04 billion.
The discount department store also posted a whopping 122.1% EBITDA increase to $29 million, up from $13 million last year.
Big W’s cost of doing business also fell 117 basis points to 32.2%.
In the September quarter last year, same-store sales grew 2.9%, with comps jumping 0.1% in the December quarter.
BIG W affirms it has focused on lowering retail prices, birthing increased sales volumes at a lower average sales price. The company asserts gross profit has remained “largely unchanged”.
As part of its turnaround, Big W saw a “refresh” of 121 stores during the half-year, in addition to re-joining the Woolworths Rewards loyalty program.
Woolworths states its turnaround plan for Big W remains “multi-year” and expects the retailer to post a FY18 loss of between $80 – 120 million – siginificantly lower than the loss of $165 million recorded last year.
Its FY18 outlook is significantly lower than original forecasts of a $150 million loss.
Woolworths Chief Executive, Brad Banducci, states Big W has a long way to go, however, is performing in in line with its turnaround plan:
“Customers are noticing improvements, resulting in a 1.6 per cent increase in transactions and 5.4 per cent growth in the number of items sold in the half”.
For H2Y18, Big W aims to continue retail price reductions, whilst enhancing its digital offerings. Improvements in stock flow are also expected.