Woolworths’ first-half profit rises 1 per cent to $979m

Australia’s leading supermarket Woolworths has reported a 1 per cent lift in first-half profit to $979 million this Wednesday morning, despite struggling to match food sales growth of rival Coles.

Woolworths comparable food sales grew 2.3 per cent in the half-year, below the 3.0 per cent growth reported by Coles on Tuesday.

“It was a challenging half across all of our businesses with subdued customer demand and volatile weather in the second quarter,” Woolworths chief executive Brad Banducci said on Wednesday.

The removal of single-use plastic bags and rival Coles’ Little Shop campaign, resulted in a weaker-than-expected first quarter for the supermarket giant.

While food sales improved in the second quarter, Banducci said the market remains challenging with subdued consumer demand and input cost pressures.

“While the first half was below our financial expectations, we made progress in a number of important areas and are confident that if we remain focused on our key priorities, we will continue to transform our business for the benefit of all of our stakeholders,” Banducci added.

Banducci credited the supermarket’s customer-first culture for continued strong customer metrics.

Total sales grew 2.3 per cent to $30.59 billion and EBIT increased by 1.0 per cent, with a strong underlying customer shift to online during the half.

Endeavour Drinks’ sales increased by 1.8 per cent but EBIT decreased by 6.4 per cent with Dan Murphy’s performance below expectations.

Steve Donohue was appointed interim managing director of Dan Murphy’s last month and will work on building ‘discovery’ in the customer experience and making the business digitally-led.

Big W saw comparable sales growth in the second quarter of 5 per cent, but it delivered a loss before interest and tax of $8 million. Banducci said this was a “marginal improvement on the prior year”. While the business is expecting further losses for the year, they are not expected to be as severe as FY18’s $110 million loss.

Looking forward, the group is reviewing the network of Big W stores and distribution centres, and said it will provide an update over the next four to six weeks.

This is an edited version of a story that originally appeared on sister site Inside FMCG. 

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