Certain comparatives have been reclassified to conform to the current period’s presentation to better reflect the nature of financial position and performance of the Group. Refer to Appendix Two for further information.
Note: This announcement contains certain non-IFRS measures that Woolworths believes are relevant and appropriate to understanding its business. Refer to Appendix One for further information.
Note: Ratios and percentage changes referenced throughout this document are calculated on unrounded figures.
Brad Banducci, Woolworths Group CEO, said: “At the end of FY17, we said that we were moving from turnaround to transformation. In the current half we have seen some early signs of this transformation with good progress on a number of strategic initiatives and pleasing sales growth from all of our businesses. We remain committed to our focus on building a customer and store-led culture and team with a highlight in the half being the continued improvement in customer, team and supplier advocacy scores across the Woolworths Group.
“In Australian Food, despite beginning to cycle some more challenging prior year numbers, sales increased by 5.1% with a strong second quarter (comparables sales: +5.0%). EBIT increased by 11.1% due to strong sales and continued improvement in stock loss despite investment in key strategic initiatives such as digital, incremental team training and IT as well as higher depreciation costs.
Woolworths Supermarkets sales growth continues to be driven by increased customer advocacy with a record store-controllable VOC score of 84% in December and customer transaction growth of 5.3% for the half.
In FoodCo and Metro, we substantially completed the rebranding and reformulation of our core Woolworths brand and maintained strong sales growth from our own brands in the half. Metro delivered strong double-digit sales growth.
WooliesX completed the rollout of Pick up to over 1,000 Australian Food sites while significantly improving customer satisfaction. Online sales grew strongly in the half, while Woolworths Rewards members reached 10.5 million by the end of half with improving underlying customer scan rates.
“Endeavour Drinks delivered strong sales growth in a competitive market. Both retail banners outgrew the market in the first half with December sales for both Dan Murphy’s and BWS a highlight. EBIT growth was slower, impacted by price investment to match competitor offers and cycling the gain on sale of a business in the prior period.
“New Zealand Food sales grew by 3.6% in the half with second quarter comparable sales growth of 3.3% the highest in a number of years. As previously highlighted, FY18 is a year of investment and has impacted EBIT in the half, declining by 7.7% due to incremental investments in team hours, produce and digital initiatives. Online sales growth was a highlight as we expanded delivery and pick-up capacity and lowered fees.
“In our portfolio businesses:
BIG W’s sales performance improved in the half, albeit with more modest growth in the second quarter. A focus on lowering prices for our customers has driven higher volumes but at a lower average selling price with gross profit dollars largely unchanged. This together with planned customer investments and volume-driven cost increases has resulted in a small loss for the half ($10 million). While this continues to be a multi-year turnaround, we currently expect the BIG W loss for FY18 to be $80 - $120 million.
ALH Hotels delivered another strong half of sales and EBIT growth with comparable sales increasing across all key areas of Gaming, Bars and Food.
Petrol delivered an improved EBIT during the period, assisted by a reduction in depreciation due to the assets within the business being classified as held for sale. Woolworths Group continues to assess its options and as the agreement with BP remains in place, the Petrol business continues to be classified as a discontinued operation.
“In summary, we have continued to build on the momentum from the second half of FY17 and I would like to thank our team for their passion, hard work and commitment. For the remainder of the year we are focused on delivering consistently good customer shopping experiences across all stores and days of the week, embedding current strategic initiatives, and continuing our investment in digital and data.”
Woolworths Group Chairman, Gordon Cairns, said: “We are pleased that the Woolworths Group has been able to deliver a strong half of sales and profit growth as well as continued investment for the long-term and a meaningful reduction in net debt. We have made good progress in the transformation of the business but we continue to see significant opportunity for further improvement. Reflecting the improved profit result for the half and cash generation, the Woolworths Group Board has announced a dividend of 43 cents per share, a 26.5% increase on the prior year.”
Read the full results here.