Woolworths Profit Up 12%, Big W Wobbles
Woolworths has post a 12.5% lift in full year-profit, following strong supermarket growth, as Big W continues its turnaround strategy, notching continued losses despite increased sales.
For the full-year, total group net profit [after tax] reached $1.72 billion, with sales spiking 1.9% to $61.5 billion. EBIT has lift 3.8% to $2.74 billion.
The group claims it’s progressing its turnaround strategy for Big W, adding there’s “still a long way to go.”
Following previous reports, Woolworths is pursuing its new alliance with Caltex, coupled with an IPO or sale of its petrol division.
Commentators claim the group intends to use sales proceeds to lift Big W results, increasing turnaround investments.
Woolworths FY18 dividend jumped 22.6% to $1.03 a share, including a special dividend of 10 cents, following improved trading.
Big W finished the year with a $110 million EBIT loss – a 26.9% improvement versus last year’s $151 million loss.
Full-year sales for the discount department store lift 0.7% to $3.5 million, with gross margin increasing 43 bps to 31.7%.
By contrast, ‘cost of doing business’ at Big W slipped 74 bps to 34.8%.
Sales per square metre lift 0.7% from $3,345 last year to $3,369.
By the end of June, Big W claims 81% of its customers remain “satisfied” with their in-store experience.
The budget department store asserts its dropped prices for over 4,500 “key value lines” during the year, coupled with a “light store refresh” of 46 stores, notching a total of 165 complete.
For FY19, Big W affirms it’s focused on price leadership, increased product range and an “easy” in-store and online experience.
Concerning group FY19 outlook, Woolworths expects further capital management to finalise its “successful exit” from petrol.
“Continued progress” is expected at Big W throughout FY19, with further loss reduction projected.
Woolworths claims Big W’s financial FY19 financial performance will be driven by the key Christmas trading period.
The conglomerate is set to announce its Q1’12 earnings result in November this year.