ID :
102978
Wed, 01/27/2010 - 20:08
Auther :
Shortlink :
http://m.oananews.org//node/102978
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Woolworths maintain profit outlook
Supermarket giant Woolworths Ltd has maintained its outlook for fiscal 2010 despite
posting disappointing first half sales due to low price rises and the waning of the
federal government's fiscal stimulus packages.
Sales revenue for the 27 weeks to January 3 slowed dramatically even though market
share and volume growth was solid, particularly for its key supermarkets operation.
Woolworths said it expects the second half will also be affected by low price
inflation - that is, a slower pace of rises in the prices of goods - as well as
interest rates, petrol prices, confidence around employment and consumer attitudes
to spending.
Sales for the first half rose 4.2 per cent to $27.20 billion, but this was less than
half the 8.8 per cent growth recorded in previous corresponding period.
Second quarter sales rose 4.1 per cent to $13.8 billion, compared to 8.1 per cent
growth a year earlier.
Woolworths chief executive Michael Luscombe said on Wednesday it had been an
"interesting year to say the least".
"At the full year results last year we said that this year was going to be a
challenging one particularly in terms of sales dollars," he said during a
teleconference.
Investors, who were expected second quarter sales growth of around 5.6 per cent,
were disappointed and sent Woolworths shares down 68 cents, or 2.47 per cent, to end
at $26.80.
"This marks a continued decline from the first quarter result, where sales growth
came in at six per cent. Big W was particularly hard hit," IG Markets research
analyst Ben Potter said.
"Perhaps we're starting to see customers moving to freshly refurbished Coles stores.
"Either way, we're probably seeing the effects of lower levels of stimulus within
the economy."
However, the retailer reaffirmed full year guidance of overall sales to "grow in the
upper single digits", excluding petrol sales, in fiscal 2010.
It still sees earnings before interest and tax (EBIT) growing faster than sales and
annual net profit growing by between eight per cent and 11 per cent.
Woolworths' Australian food and liquor sales rose 6.8 per cent in the first half to
$18.1 billion, helping to support a 4.1 per cent rise in overall supermarkets
revenue to $23.08 billion.
For the quarter, domestic food and liquor sales rose 5.9 per cent, compared to 7.1
per cent in the same period in fiscal 2009, reflecting the impact of "very low
sell-price inflation" and a waning of the government's economic stimulus.
The Big W division suffered, with sales falling by 0.3 per cent in the second
quarter after rising 9.7 per cent the year before.
Revenue from petrol sales was down 9.5 per cent over the six months to $2.78 billion
due to a fall in the average fuel price.
Shares in rival Wesfarmers Ltd, which owns Coles group, closed down 55 cents, 1.88
per cent, at $28.65.
posting disappointing first half sales due to low price rises and the waning of the
federal government's fiscal stimulus packages.
Sales revenue for the 27 weeks to January 3 slowed dramatically even though market
share and volume growth was solid, particularly for its key supermarkets operation.
Woolworths said it expects the second half will also be affected by low price
inflation - that is, a slower pace of rises in the prices of goods - as well as
interest rates, petrol prices, confidence around employment and consumer attitudes
to spending.
Sales for the first half rose 4.2 per cent to $27.20 billion, but this was less than
half the 8.8 per cent growth recorded in previous corresponding period.
Second quarter sales rose 4.1 per cent to $13.8 billion, compared to 8.1 per cent
growth a year earlier.
Woolworths chief executive Michael Luscombe said on Wednesday it had been an
"interesting year to say the least".
"At the full year results last year we said that this year was going to be a
challenging one particularly in terms of sales dollars," he said during a
teleconference.
Investors, who were expected second quarter sales growth of around 5.6 per cent,
were disappointed and sent Woolworths shares down 68 cents, or 2.47 per cent, to end
at $26.80.
"This marks a continued decline from the first quarter result, where sales growth
came in at six per cent. Big W was particularly hard hit," IG Markets research
analyst Ben Potter said.
"Perhaps we're starting to see customers moving to freshly refurbished Coles stores.
"Either way, we're probably seeing the effects of lower levels of stimulus within
the economy."
However, the retailer reaffirmed full year guidance of overall sales to "grow in the
upper single digits", excluding petrol sales, in fiscal 2010.
It still sees earnings before interest and tax (EBIT) growing faster than sales and
annual net profit growing by between eight per cent and 11 per cent.
Woolworths' Australian food and liquor sales rose 6.8 per cent in the first half to
$18.1 billion, helping to support a 4.1 per cent rise in overall supermarkets
revenue to $23.08 billion.
For the quarter, domestic food and liquor sales rose 5.9 per cent, compared to 7.1
per cent in the same period in fiscal 2009, reflecting the impact of "very low
sell-price inflation" and a waning of the government's economic stimulus.
The Big W division suffered, with sales falling by 0.3 per cent in the second
quarter after rising 9.7 per cent the year before.
Revenue from petrol sales was down 9.5 per cent over the six months to $2.78 billion
due to a fall in the average fuel price.
Shares in rival Wesfarmers Ltd, which owns Coles group, closed down 55 cents, 1.88
per cent, at $28.65.
