Woolworths profit climbs 10% on Australian supermarkets

Friday 27th February 2009

Woolworths, Australia's biggest retailer, posted a 10% gain in first-half profit as increased earnings from its supermarkets made up for weaker revenue from New Zealand and from consumer electronics.

Profit rose to A$983.3 million, or 80.9 cents a share in the 27 weeks ended Jan. 4, the Sydney-based company said in a statement. Sales gained 8.8% to A$26.1 billion.

Shares of Woolworths fell 4.9% to A$26.64 as profit missed estimates. The stock is down 3.2% in the past year, outperforming the S&P/ASX 200 Index, which has tumbled about 40%. Gross margins fell 17 basis points to about 24% excluding hotels in the first half.

Earnings from Woolworths supermarkets in New Zealand, where it dominates the market with rival Foodstuffs, fell about 8% to $91.9 million. In Australian dollar terms, the decline was 21%. EBIT from consumer electronics dropped 29% to A$28.9 million, while earnings from hotels rose 3.7% to A$125 million.

Woolworths reiterated its forecast for annual profit growth of between 9% and 12%. Full-year sales would rise in "upper single digits," it said.

By Jonathan Underhill

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