Business Description:
Woolworths (WOW) is a retailer with primary activities in Supermarkets - Food & Liquor - these represent the majority of group sales and EBIT. Other operations include: BIGW discount department stores; Consumer Electronics through Dick Smith, Powerhouse and Tandy; Petrol through the Woolworths/Caltex alliance; and Hotels following an active acquisition program. Supermarkets are also operated in New Zealand.

Strategy Analysis:
Since re-listing in 1993 Woolworths has been one of Australia's most successful and consistent retailers. Success has been driven by the adoption of the 'Fresh Food People' and 'Everyday Low Prices' strategies. To continue to achieve well above average earnings growth, management realised the 'Everyday Low Prices' had to be matched with 'Everyday Low Costs'. The launch of Project Refresh in 2000 addressed the situation with a focus on reorganisation, line items and end-to-end supermarket supply chain improvements. In 10 years cumulative cost savings of over $8.0bn have been achieved, which has driven the Cost-of-Doing-Business (CODB) to sales ratio to around 20%. Further cost savings will be achieved as the focus switches to the non-food sector and regional and national distribution centres are rationalised. The Quantum project has been launched with a focus on all aspects of the business with benefits in both gross margin and CODB to emerge through 2015. Woolworths reported NPAT up 5.1% to $2.12bn for the year ended 30 June 2011. Revenues from ordinary activities were $54.51bn, up 4.9% from last year. Supermarkets achieved volume and market share growth. General Merchandise was impacted by price deflation in key categories with price reductions passed on to the customer. Diluted EPS was 173.60 cents compared to 163.17 cents last year. Net operating cash flow was $2.99bn compared to $2.75bn last year. The final dividend declared was 65 cents, taking the full year dividend to 122 cents compared with 115 cents last year. Looking ahead, the company expects a year of further earnings growth in FY12 with NPAT expected to grow in the range of 2-6%, subject to uncertain global and domestic factors.