As the market moves to value and discounted products BIG W has benefitted with the Woolworths owned store group reporting 15.3% sales jump during the past year.
The downside is that during the last quarter sales have suddenly slumped with the variety retailer reporting a 5.7% decline in June quarter revenues.
Sales came in at $4.758 billion which while lower than analyst estimates, however it did deliver an EBIT of $145 million which was more than double what was expected.
Big W’s strong sales growth of 15.3 per cent in the first half was against the prior year’s temporary store closures.
Woolworths CEO Brad Banducci claims that there “Has been a shift to more frugal shopping behaviours from consumers that dominate the Australian ‘mortgage belt’”.
He said “The trading environment for BIG W changed dramatically between H1 and H2. After delivering a strong H1 result, we
indicated in February that the H2 EBIT contribution would likely revert to more typical seasonal patterns”.
As for the supermarket group profit from continuing operations was up 4.6 per cent to $1.618bn as revenue for 2023 rose 5.7 per cent to $64.29bn, with annual sales also lower than analyst expectations.
Mr Banducci said although more normal shopping behaviours were returning, those consumers with families and mortgages – which Woolworths calls ‘Saver Families’ were increasingly turning to searching for value and being more careful with their spending.
As for BIG W who restructured their consumer electronics division the business doubled on the prior year, H2 EBIT of $11 million was below H2 F22 due to flat sales, higher promotional activity.
across the market and rising unit costs driven by higher salary costs.
The business also launched Cartology in BIG W stores during the year with 175 screens set to show advertising as the business competes for media dollars with mainstream media Companies.
