Sales growth has returned to Woolworths

Photo: Peter Parks/ AFP/ Getty Images.
  • Woolworths full year net profit after tax of $1.724 billion, up 12.5%.
  • Australian Food had the strongest growth in years comparable sales up 4.3%.
  • Dividend per share of 103 cents, up 22.6%, including a 10 cent special dividend.

Woolworths recorded the strongest growth in sales in years as the supermarket chain posted a 12.5% lift in full year profit to $1.72 billion.

Comparable sales growth was 4.3% and overall revenue was up 3.5% to $57.19 billion.

That growth is well ahead of major competitor Coles which reported annual sales growth of 2.1%, with comparable sales growth of 1.1%.

The supermarket sector faces increasing competition from discount players including Aldi.

Woolworths rewarded its shareholders with a 22.6% increase in dividends to 103 cents a shares, including a 10 cent special dividend.

CEO Brad Banducci says Australian Food delivered the “strongest sales growth” in a number of years.

“Our focus on customers putting us 1st remains at the core of what we do,” he says.

“All businesses saw an increase in customer satisfaction and traffic (transactions) during the year.

“This has led to strong sales and EBIT growth and a significant reduction in net debt, even as we invest in strategic initiatives focused on delivering sustainable growth into the future. ”

He says sales growth was 3.1% in the second half with high levels of fruit and vegetable deflation and a decline in infant formula sales.

Plastic bags

Sales also have been impacted by customers adjusting to the phasing-out of single-use plastic bags, slowing sales growth in the first seven weeks of the 2019 financial year.

“We expect sales momentum to improve over the course of the half,” he says.

“Our customer satisfaction metrics (VOC) are broadly back to the levels prior to the removal of single-use plastic bags, including Time in Queue.

“Our overall brand metrics have also continued to improve relative to our competitors, including price perception, brand preference and quality of fresh. These customer and brand scores along with our strong trading plans, give us confidence in the critical run into Christmas.”

BIG W made progress on its turnaround.

“Prices are significantly more competitive than this time last year, the majority of stores have been refreshed and the range is beginning to resonate with customers,” says Banducci.

“Comparable sales increased by 0.9% in FY18, the first increase since FY09.”

The loss before interest and tax was $110 million.

“In FY19, we expect a further reduction in losses as we continue to build momentum in the business but, as always, financial performance will depend on trading over the key Christmas period,” he says.

The results at a glance:

Source: Woolworths

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