Woolworths wins market share in NZ supermarket battle

Thursday 1st March 2012

Woolworths, which has about 40 percent of New Zealand’s supermarket sales, has widened its margins and recorded growth in both revenue and earnings in a first-half characterised by the rebranding of all its outlets as Countdown.

Woolworths New Zealand earnings before interest and tax rose 11 percent to $149 million in the 27 weeks ended Jan. 1, according to its Australian parent’s results. Sales climbed 3 percent to $2.88 billion while its gross margin widened 61 basis points to 23.03 percent.

“We have continued to grow market share, customer numbers, items sold and basket size,” the company said. “This reflects the success of the conversion of stores to the value-positioned Countdown brand, which was completed just before Christmas.”

Phasing out Woolworths’ own brand takes its supermarket offering down toward the value brand of local rival Foodstuffs, which has 60 percent of the market, worth about $8.06 billion in 2011, through its Pak’nSave, New World, Four Square, Gilmours and Liquorland outlets.

The three cooperatives that make up Foodstuffs eked out sales growth of about 0.1 percent last year, based on a tally of their combined revenue.

Shares of the Australian parent Woolworths rose 0.3 percent to A$25.39 after it reported a 17 percent drop in first-half net profit to A$966.9 million. Sales rose 5 percent to A$29.9 billion.

The results included a restructuring charge of A$300 million against its consumer electronics division, which operates the Dick Smith stores on both sides of the Tasman. They are now being readied for sale as a going concern and the company said “a number of potential purchasers have expressed interest.”

(BusinessDesk)

BusinessDesk.co.nz

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