Woolworths lifts first-half sales

Major retailer attributes sales increase to successful Christmas trading, solid results in Australian food and liquor.

Woolworths Ltd has lifted first-half sales, attributing the result to successful Christmas trading and solid results in Australian food and liquor.

In the 27 weeks to January 5, Woolworths posted sales from continuing operations of $31.84 billion, a six% increase on $30.04 billion in the previous corresponding period.

Its supermarket division posted $27.81 billion of sales from continuing operations in the half, a 6.2% increase on the $26.19 billion in the prior corresponding period.

That included $21.48 billion of sales from its Australian food and liquor division, a 4.8% increase on the $20.49 billion in the previous corresponding period.

Petrol sales were up eight% to $3.67 billion, compared with $3.39 billion in the prior half, while sales from New Zealand supermarkets rose 15.2% to $2.67 billion, compared with $2.31 billion in the prior half.

Chief executive officer Grant O'Brien said the result was "a strong and positive reflection of the four strategic priorities that have shaped our focus over the last two years".

"The first priority, and the central theme of our focus, has been to extend our leadership in food and liquor.

"The improvement in the growth rates for our food and liquor business demonstrates the transformation that is underway."

Mr O'Brien said successful Christmas trading helped deliver sales growth in the Australian food and liquor division as well as increases in market share, customer numbers, basket size and items sold.

He said the group delivered savings of more than $400 million to customers, mostly through its "More Savings Every Day" program, and noted price deflation of 4.1% for the half after promotions and volumes are included.

"Despite the competitive market, the underlying strength of our business has allowed us to continue to expand our store network," he said, adding the group created over 3,900 new jobs during the half.

The retailer's home improvement business lifted sales by 25% in the half to $796 million, compared with $637 million in the previous corresponding period.

Its high-profile Masters venture posted a 49.4% lift in sales to $393 million, compared with $263 million in the prior corresponding period, while its home timber and hardware division increased sales by 7.8% to $403 million, up from $374 million.

General merchandise lifted 0.2% to $2.452 billion, from $2.447 billion.

"In general merchandise, sales were impacted by differences in the timing of the Big W annual toy sale relative to the reporting date and the early stages of our Big W strategic repositioning," Mr O'Brien said.

"Trading conditions continue to be challenging with strong competition, ongoing price deflation and increased promotional activity leading to a disappointing 0.2% sales growth for the half."

Mr O'Brien said the group was aligning its focus to core categories to ensure Big W is well placed for future growth, saying this is expected to keep affecting short-term sales.

The group's hotel business posted a 3.8% lift in sales to $788 million, up from $759 million.

Mr O'Brien noted a sales uplift from the Victorian gaming regulatory changes cycled during August.

"The second quarter therefore returned to a standard growth pattern, evidencing tougher trading conditions, particularly in bars and gaming."

He said online sales exceeded $1 billion for calendar 2013.

Woolworths is focused on continuing the momentum it has generated into the second half of the financial year, he said.

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