Woolworths Sales Grow In A Difficult Market

Last week, Woolworths announced financial year 2014 first half sales increased 6.0% on the previous year. Sales for Q2 were $16.2 billion, a 5.9% increase over Q2 2013.

Grant O’Brien, Woolworths CEO, said the sales result reflected their “four Strategic Priorities that have shaped our focus over the last two years.” The success of Woolworths’ main focus, to extend their leadership in Food and Liquor was seen in the improvement in growth rates for their Food and Liquor business.

As reported recently by other retailers, the Christmas period gave Woolworths a boost, with a 4.8% sales growth for the half year, plus increases in market share, customer numbers, basket size and items sold.

Woolies’ New Zealand Supermarkets also had a sales increase, but at 2.6% for the half year, not as good as Australian stores. Their new focus resulted in the New Zealand Q2 improvement being the best over the past 18 months. Fluctuating exchange rates painted a slightly better picture, showing a 15.2% sales improvement when measured in Australian dollars.

Company Strategy

The company’s strategy of linking service stations to their retail outlets paid off by delivering an 8% increase in petrol sales.

With online sales becoming more important, Woolworths reported exceeding $1 billion in sales for calendar 2013, placing them ahead of their FY14 target, more than a 40% improvement in the half year and Q2, helped along by the Food and Liquor businesses and the Christmas period.

The 38 Woolworths-owned Masters stores also contributed to the good news, with a sales increase of 49.4% for the half year. Seven new stores were opened in the first half year, and the company says they are on track to open a total of 18 Masters stores this financial year. Home Timber and Hardware stores also contributed, with a 7.8% increase in sales.

Woolworths customers should be happy, because the company says their “More Savings Every Day” program delivered $400 million in savings to customers, with lower average prices showing price deflation of 4.1% for the first half.

On the employment front, Woolworths created more than 3,900 new jobs in those two quarters, including 1,400 jobs for young people.