Australian Grocer Woolworths Reports Significant Loss, CEO to Retire
Australian grocer Woolworths has reported a significant half-year loss, primarily due to various one-time writedowns, and has announced the impending retirement of its longtime chief executive.
The company disclosed a net loss of 781 million Australian dollars for the roughly six months through December, influenced by a previously indicated writedown of its New Zealand business and a loss associated with its investment in the drinks and hotel company Endeavour. This figure contrasts with a net profit of A$845 million the previous year.
When excluding these one-time items, net profit rose by 2.5% to A$929 million. Revenue increased by 4.4% to A$34.63 billion during the half, slightly surpassing market expectations.
Despite the statutory loss, Woolworths announced its interim dividend would be 47 Australian cents per share, a 2.2% increase, aligning with the profit growth before significant items.
The primary Australian food unit of Woolworths observed a 5.4% sales growth, while the discount chain Big W saw a 4.1% decrease in sales.
CEO Brad Banducci is set to retire in September after spending 13 years with the company, including over eight years as CEO. Amanda Bardwell, who has been leading the company’s digital arm WooliesX, will replace him.
Woolworths mentioned that sales at the beginning of the fiscal second half have moderated, reflecting subdued inflation and a more cautious consumer sentiment. Australian food retail sales rose by 1.5% in the first seven weeks of the half, with New Zealand sales increasing by 1%. The company highlighted early progress in transformation initiatives, such as the launch of a rewards program and a rebranding in New Zealand, but noted it will take time to fully realize their potential.
Big W experienced a 6% sales decline at the start of the second half. While sales trends are expected to improve in the fiscal fourth quarter, Woolworths anticipates Big W’s earnings to roughly break even for the half.
Amid rising cost-of-living concerns, Australian supermarkets, including Woolworths, have come under increased scrutiny. The government has tasked the country’s competition watchdog with investigating retail pricing competitiveness and allegations of price gouging within the sector. An interim report from this inquiry is anticipated in August.
Analyst comment
Negative news: Woolworths reported a significant half-year loss due to writedowns. CEO Brad Banducci is retiring. Sales growth slowed in the beginning of the fiscal second half. Australian supermarkets are under scrutiny for pricing competitiveness. Market may experience a decrease in consumer confidence and potential investigation impact.
