Home World Business Woolworths’ revival continues but Big W drags

Woolworths’ revival continues but Big W drags

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Woolworths has flagged higher labour and produce costs this half and a wider loss for its troubled discount department store Big W, while posting stronger food sales at its 1000-odd supermarkets. 

The country’s biggest supermarket chain said Australian food sales grew 5.1 per cent in the third quarter to $9.28 billion, or 5.6 per cent adjusting for the timing of Easter. 

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Total group sales were up 4.4 per cent to $13.8 billion in the 13 weeks to April 2, or 4.4 per cent adjusting for Easter.

Chief executive Brad Banducci said Woolworths was still in the early stage of its turnaround, but was “very pleased” with the supermarket growth, which exceeded 3.2 per cent growth forecasts from broker Deutsche Bank.

Like-for-like sales, excluding new stores, grew by 4.5 per cent, compared with a 1.3 per cent decline the prior corresponding period. 

As expected, Woolworths also reported stronger Like-for-like growth than rival Coles, which just reported 0.3 per cent quarterly growth. 

Woolworths said total group sales were up 4.4 per cent to $13.8 billion in the 13 weeks to April 2. Woolworths said total group sales were up 4.4 per cent to $13.8 billion in the 13 weeks to April 2. Photo: Glenn Hunt

Woolworths chief executive officer Brad Banducci said Woolworths was “still in teh very early stages of our turnaround” but was pleased with the progress we have made on our key priorities with the strong sales growth in Australian Food during the quarter a particular highlight.

“However, the second half of 2017 will reflect the financial impact of higher investment in key areas, cost price increases (particularly in meat and produce) and our response to ongoing competition and promotional intensity.

“BIG W is a work in progress and its turnaround will be a multi-year journey. Due to the investment we are undertaking as part of our revised plan, we currently expect BIG W to report a loss before interest and tax of between $115 and 135 million for in the second half of 2017.” 

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