Hopeful for positive Christmas trading.
Woolworths released its first quarter sales results today with the Food business delivering positive comparable sales growth, although Big W sales suffered a 5.5% slump.
Woolworths group CEO, Brad Banducci said, “We made good progress during the quarter on our five key priorities and are seeing far more consistency in our trading performance in Australian Food. Customers continue to respond to the improvements we are making, with Australian Food delivering its first positive comparable sales growth since second quarter 2015, despite ongoing material price deflation. While we are pleased with our progress, there remains much more to do. Our trading performance over the key Christmas trading period is crucial to the financial performance of the Woolworths Group in FY17.”
Australian Food
Australian food sales increased by 1,7% to $9.3 billion for the 14 weeks of the first quarter of FY17 compared to the previous year. Comparable sales increased by 0.7%, driven by continued improvement in comparable transactions of 2.5%.
Two supermarkets closed and three were closed to end the quarter at 991 supermarkets. One Thomas Dux store was also closed to end the quarter with four.
Big W
Big W sales of $880 million for the quarter decreased 5.5% on the previous year with comparable sales decreasing by 5.7% due to significant SKU reduction and clearance activities in deleted lines as well as a reduction in the number of unprofitable promotions. Toys, books and audio visual outperformed despite changed timing of the toy sale compared to last year. Apparel was markedly softer than expected, compounded by the cold start to spring.
“We expect modest improvement in apparel sales in the second half as we transition directly to sourced and designed product. However, this is unlikely to offset the deflation and strategic clearance activity that will continue throughout FY17, impacting sales momentum and margins. We do not currently anticipate an improvement in FY17 EBIT compared to FY16,” Banducci said.
“Whilst it is still early in our multi-year turnaround we have made solid progress in driving our strategic plan. This includes our own online site in the quarter, clearing excess inventory and reducing the complexity of our offer,” he added.
At the end of the quarter, there were 186 Big W stores, unchanged from year end.
Masters / HTH
The sale of Home Timber and Hardware was completed on October 2, 2016. The sale of Masters’ inventory is proceeding well, assisted by GA Australia and KordaMentha. Steps to implement the transaction with Home Consortium are also progressing.