Woolworths sees 15.2% profit rise in NZ supermarkets

Friday 25th February 2011

Australian retailer Woolworths has reported a 15.2% profit rise in its New Zealand supermarket business, which includes Countdown and Woolworths stores, in the six months to December 31 from the same period last year.

Sales of $2.795 billion were up 4.1% on last year. The gross margin rose 31 basis points to 22.41%. Earnings before interest and tax rose 15.2% to NZ$134.3 million.

The company said sales on a comparable basis were up 3.5%, and when food price inflation was taken into account sales rose 2.9%, reflecting growth in both volume and market share.

The company, which competes with supermarket co-operative Foodstuffs, has been developing the value-positioned Countdown brand and 87% of its stores now trade under this brand.

"Gross profit has improved while still improving price competition position," the company said.

It attributed the profit rise to the repositioning of the business, which was now complete. Customers were responding and refurbished stores had higher average sales growth.

There had been significant improvements in shelf stock availability and continued reduction in shrinkage.

The company has invested in a new national distribution centre in Auckland.

Woolworths also owns the Dick Smith Electronics. Its New Zealand consumers electronics business reported earnings before interest and tax of NZ$3.1 million, down 65.6% from last year.

The weak economic environment was affecting discretionary retailers and price deflation was also an issue.

The company cited the impact of Australian floods and New Zealand earthquakes as uncertainties for its business when reducing a forecast of earnings growth to between 5% and 8%.

NZPA

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