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Countdown shifts more business online as annual earnings edge up

Thursday 29th August 2019

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Woolworths' New Zealand Countdown supermarkets eked out a small gain in annual earnings as it sold a greater volume of goods at lower prices. 

The local unit of the Australian retailer reported earnings before interest and tax of $296 million in the 53 weeks ended June 30, up an adjusted 1 percent from the 52-week period a year earlier. Sales rose 2.4 percent on an adjusted basis to $6.71 billion. 

Countdown's volume of comparable transactions rose in each of the retailer's New Zealand quarters of its financial year, ranging between 0.2-3.2 percent growth. However, average prices contracted in each quarter by 0.3-1.8 percent. 

"New Zealand food had a strong second half with comparable sales growth of 3.6 percent and normalised H2 ebit growth of 4.4 percent," group chief executive Brad Banducci said in a statement. 

Government data this month showed retail spending at supermarket and grocery stores increased 2.7 percent to $20.69 billion in the 12 months ended June 30 from the previous year. Based on that, Countdown increased its market share to 32.4 percent from 31.9 percent. 

The New Zealand supermarket chain's online sales rose a normalised 40 percent in the year, and accounted for 6.8 percent of sales, above the 4.2 percent of company-wide sales.

Online sales growth gained momentum through the year, with Countdown's fourth-quarter online sales up 50 percent at $125 million, accounting for 7.7 percent of total sales. In the first quarter of the year, online sales were up 40 percent at $107 million and accounted for 6.4 percent of total sales. 

The company said the growth was due to greater capacity and growth in its pick-up and same-day delivery services. 

The chain closed three stores and opened two, leaving it with 180 at the end of the period. It also refurbished 10 other stores in the year. 

Woolworths' group profit was up 56 percent at A$2.69 billion, including a A$1.2 billion gain on the sale of its petrol business. Profit from continuing operations was up 7.2 percent at A$1.75 billion, and annual dividend payments of A$1.02 per share were up 9.7 percent. 

The ASX-listed shares decreased 1.1 percent to A$35.77. 


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