AUSTRALIA: Woolworths Struggles In Q3

Woolworths Ltd has reported another set of weak results for its latest fiscal quarter, hurt by stagnating food and liquor sales.

Sales for the third quarter were down 0.3% to A$14.9bn, while underlying revenues (excl. home improvement) were down 0.7% to A$14.4bn. The group’s core supermarket and liquor division saw sales edge up 0.4% to A$10.66bn, but they declined by 0.9% on a calendar-adjusted basis. Meanwhile, the Big W chain was hit by a 4.6% drop to A$865m.

Woolworths said volumes and customer traffic rose during the period, but this was offset by “high levels of deflation, predominantly from our price investment”. CEO Brad Banducci admitted: “We tried to do too much in the first half and that led us to not doing anything very well”. He added: “It will be a three to five year journey to rebuild Woolworths supermarkets, but we are confident we are on the right track.”

Banducci also kicked off a major review of the group, saying Woolworths will now take a more “objective” approach to its non-food operations. The review will look at the plans for new store openings, the recently-revamped customer loyalty programme, and options for more cost savings.

NAM Implications:
  • The rapid growth of ALDI over five years, added to the increasing popularity of private label, have put pressure on Woolworhs and Coles
  • …with the impact on Woolworths being obvious in these figures…
  • Watch this space…