UPDATE – Shares in Woolworths Group have plummeted 4.96% after midday, following results dubbed ‘poor’ by many analysts.
Woolworths owned discount department store, Big W, has continued its turnaround strategy, with HY19 comparable sales growth notching 3.8%. Whilst sales have “stabilised”, gross margin slipped 58bps year-on-year to 31.8%.
Group Chief Executive, Brad Banducci, asserts Big W costs are now “well controlled”, with its $8 million [pre-tax] half-year loss a “marginal improvement” versus the previous year.
Representing a 20.8% change, it follows a half-year loss of $10 million in HY18.
Driven by increased sales momentum, comparable sales growth in the second quarter notched 5%.
The “pleasing” improvement is derived from online sales, and lower margin categories such as toys and leisure.
FY19 losses are forecast to be lower than FY18, however, remain subject to market conditions.
“With Big W sales having stabilised and customer metrics improving, we are now focused on converting sales into profit and are currently reviewing the Big W store and DC network,” asserts Banducci.
“We will provide an update on the outcomes of the review in the next four to six weeks.”
Despite HY19 sales growth, profit is said to have been impacted by category mix and clearance items.
[Big W]
Additional products categories have also been refreshed through its ‘Customer 1st Ranging.’
Concerning H2Y19, the retailer seeks to further build price trust, and simplifying its Customer 1st ranges.
Improved stock availability is also pledged via better underlying processes.
The news comes as parent company Woolworths reports an interim dividend of 45 cents per share, up from 43 cents.
Half-year group sales lift 2.2% to $30.7 billion, with profit jumping 1% to $979 million.
Woolworths has announced it intends to return up $1.7 billion in capital to shareholders, after the sale of its petrol business to EG Group.
The sale is expected to be completed next month.
The conglomerate has warned investors it expects trading conditions to remain challenging, citing sluggish consumer spending.
