Woolworths concedes first-half efficiency was | Australian Markets
Woolworths has conceded its first-half efficiency was under expectations because it copped a $240 million hit in missed food gross sales following strike motion final 12 months.
Chief govt Amanda Bardwell additionally flagged job losses as half of a $400m cost-saving program to simplify the business, however didn’t say how many roles shall be cut.
Woolworths revealed the influence of the 17-day strike motion by its warehouse employees — which left cabinets naked throughout Victoria, the ACT and NSW — had ballooned to $240m, up from the initial estimate of $140m supplied on the finish of final 12 months.
Earnings at its Australian grocery business declined 12.8 per cent to $1.39 billion, which included a $95m hit as a consequence of the commercial motion within the lead up to Christmas.
Excluding the strike, grocery store gross sales would have elevated by 3.7 per cent, as a substitute of the precise 2.7 per growth recorded, whereas earnings would have declined by 5 per cent as a result of promotional investment and ongoing inflation in wages and different prices.
“We’re already in a pattern of behaviour from customers where we’re seeing increasing cross-shopping,” Ms Bardwell advised analysts.
“Unfortunately, as we had the industrial action under way in December, it did mean that in many of our stores, customers did need to go to competitors to be able to get products that they may have wanted or to be able to complete a full shop.
“We’re competing for every customer and so we want to see those customers return fully to Woolworths.”
Ms Bardwell mentioned gross sales in Victoria haven’t but absolutely recovered however availability and buyer metrics had been returning to pre-disruption ranges.
Group gross sales hit $35.9b, up 3.7 per cent on the earlier 12 months, with pre-tax earnings down 14.2 per cent to $1.45b. Web revenue declined 20.6 per cent to $739m within the 27 weeks to January 5, however improved from the $781m loss reported a 12 months in the past.
“It’s a very disappointing result and it’s not a result that any of us would want to be delivering,” Ms Bardwell mentioned.
When requested what she was doing to improve Woolworths’ underlying efficiency, Ms Bardwell mentioned she would simplify its product vary and improve availability.
The weak efficiency, which Woolworths chair Scott Perkins conceded was under its expectations, despatched shares down 3 per cent to $30.60.
“We are focused on addressing these challenges and under our new CEO, Amanda Bardwell, we have a clear set of priorities for 2025,” he mentioned.
“The fundamentals of our business remain strong and we are committed to meet our customers’ needs and create value for shareholders.”
As half of its cost-cutting program, Woolworths additionally plans to scale back its product vary however Ms Bardwell didn’t disclose particular particulars about which traces could be discontinued.
“What we’re talking about here is really a very targeted reduction in some areas where we’ve just seen that customers are not needing and not responding to the number of different (products) that we have in some particular categories,” she advised media.
“To be clear, there is no set target on this at all.”
Woolworths mentioned client satisfaction was trending positively within the half earlier than it was accused by the competitors watchdog of tricking prospects with faux reductions on a whole lot of merchandise. Rival Coles was additionally accused.
Ms Bardwell mentioned whereas the grocery store was “absolutely pleased” to see rates of interest lower for patrons, and anticipated consumers to proceed searching for lowest attainable costs.
“Value-seeking behaviour from customers looks like shopping more of our specials . . . looking for our own-brand products, and opening price points and continuing to compare prices, and therefore increasing numbers of customers choosing to cross shop across our competitors,” she mentioned.
Earnings at its low cost division chain Huge W tumbled 46 per cent.
Woolworths has cut its interim dividend by 17 per cent to 39¢ per share, reflecting the decrease earnings.
Keep up to date with the latest news within the Australian markets! Our web site is your go-to source for cutting-edge financial news, market trends, financial insights, and updates on native trade. We offer every day updates to make sure you have entry to the freshest info on Australian stock actions, commodity costs, currency fluctuations, and key financial developments.
Discover how these trends are shaping the long run of Australia’s economic system! Go to us repeatedly for essentially the most participating and informative market content material by clicking right here. Our fastidiously curated articles will keep you knowledgeable on market shifts, investment methods, regulatory modifications, and pivotal moments within the Australian financial panorama.
