Woolworths posts $2.4 billion profit, doubles online sales

By (incomplete) | 29 August 2014

Woolworths has boosted its Net Profit After Tax by 8.5% to $2.451 billion and doubled its online sales over last year to $1.2 billion.

The strong result from Australia's largest retailer was underpinned by growth in its Australian food, liquor and petrol operations.

Earnings Before Interest and Tax was up 5.3% on a normalised 52-week basis at $3.775 billion.

Chief executive Grant O'Brien said that the retail giant had delivered sustainable profit growth while continuing to invest in the future of the business.

“We continue to put in place the enablers for a new era of growth,” O'Brien said.

“We have commenced Mercury II to drive the next phase of supply chain enhancements and our 50% ownership of Quantium is allowing us to use data to better tailor the shopping experience to the needs of our customers”

O'Brien said that the result had come in a highly competitive market.

“We have reinforced our position as Australia’s leading supermarket, providing customers with the first choice for fresh food, excellent value and the greatest access across all channels.

“In a highly competitive market with ongoing consumer uncertainty, we have increased market share whilst also delivering value to customers who have saved more than $750 million from key promotional campaigns throughout the year and benefited from deflation in average prices of 3.1% for the year.”

The result came in a year when Woolworths ended its relationship with Droga5, handing the creative account to Leo Burnett and while the retailer conducted a drawn out review of its media business before reappointing Carat last week.

While it performed strongly in supermarkets, liquor and petrol, the company highlighted some areas of poor performance.

“Despite making good progress with the previously advised transformation of our BIG W business, this transformation together with challenging trading conditions, impacted our profitability leading to a disappointing result,” O’Brien said.

He also highlighted the challenging state of the home improvement business led by the Masters brand which continues to struggle but had now moved on from start-up phase.

The company said cost of living pressures would continue to be felt across the entire group.

“We expect trading conditions to remain challenging in FY15 with consumers managing cost of

living pressures in a time of economic uncertainy,” the compay said.

“Subject to the uncertainties noted above, we expect FY15 to be another year of growth with Net Profit After Tax expected to increase 4% - 7%.”

Disclaimer: the author was a consulant to Droga5 during the period it handled the Woolworths business.

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