The latest Woolworths Limited results released last Friday revealed an $2.156 billion net profit after tax for the financial year ending 20 June 2015, a 12.5 per cent drop on the previous year’s profits.

 

Sales figures before significant items equalled $60.7 billion, down 0.2 per cent, or up 2.5 per cent excluding petrol.

 

Earnings before interest and tax after significant items were $3. 32 billion, down 12 per cent.

 

Chief Executive Grant O’Brien recognised results were below the group’s expectations.

 

“In a year of clear challenges and structural change, we have delivered sales and profit in line with the prior year, albeit below our expectations,” said Chief Executive Grant O’Brien.

 

Woolworths Food Group Managing Director Brad Banducci also spoke about the results saying that Woolworths Food was in the process of “resetting”.

 

“We are resetting our Food business to ensure a sustainable competitive position and maintain strong returns to shareholders,” Banducci said.

 

“We enjoy significant advantages in scale, network, supply chain and a proven ability to extract operating efficiencies. However, a more competitive environment will result in lower margins as we invest to improve all aspects of the customer experience, notwithstanding gathering momentum in operating efficiencies.”

 

“In May I outlined the Australian Supermarket Customer 1st Strategy. We have made a strong start to our three year journey of regaining sales momentum,” Banducci continued.  “Our new leadership team is in place and they are delivering on our commitment not to be beaten on price, enhancing the shopping experience, improving the fruit and vegetable offer, increasing the effectiveness of our communication and, most importantly, embedding a culture which has customers at the heart of every decision.”

 

At the same time as releasing results Woolworths announced Gordon Cairns to replace Ralph Waters as chairman.

Australian food, liquor and petrol results

 

Australian food, liquor and petrol divisions reported an EBIT profit before significant items of $3,439.8m, a 2.1 per cent increase on 2014.

 

Woolworths said that food and liquor sales in the 2015 fourth quarter were disappointing  with Easter adjusted comparative sales down 0.9 per cent.

 

Woolworth’s strategies for 2016 include “walking the talk”and putting customers first at all points, better communicating its lower prices, further increasing store team hours and re-launching its customer loyalty program.

 

Petrol

 

Petrol sales were $5.6 billion, a drop of 20.3 per cent which Woolworths mostly attributed to a drop in fuel prices and changes to its alliance with Caltex.

 

Woolworths plans to open 18 new petrol stations across the 2016 financial year and to renovate 100 existing petrol canopies. It will also concentrate on increasing merchandise sales through specials.

 

Liquor

 

Woolworths said its liquor stores continued to grow despite a tough market. Liquor sales were $7.7 billion, up 4.2 per cent on 2014. Dan Murphy’s and BWS both had improved results.

 

The group plans to open 11 new Dan Murphy’s stores and 35 new BWS stores across the 2016 financial year. Woolworths will also try to cater for increasing demand for craft and premium liquor.

 

Countdown New Zealand Supermarkets

 

Woolworths said its New Zealand Countdown supermarkets delivered a strong second half performance with improved sales and profit momentum.

 

Its overall yearly EBIT before significant items was AUD $326 million, a 5.2 per cent increase on 2014.

 

Woolworths said that it plans to open eight new Countdown stores in the 2016 financial year. The company also aims to drive up online shopping and to lift the performance of its fruit and vegetables by particularly focusing on supply chain and fixtures.

 

General Merchandise – Big W and EziBuy

 

Woolworth’s general merchandise presence, Big W and EziBuy online women’s clothing store, reported an EBIT before significant items of $114.2 million, a  25.3 per cent drop on 2014 results.

 

Woolworths said that general merchandise results continued to be adversely impacted by its ‘Big W business transformation’, the clearance of unproductive inventory and systems implementation issues arising from the transition to a new merchandising system in the second half of the year which impacted stock availability.

 

Hotels

 

EBIT profit for hotels was $234.5 million, down from last year’s $275.4 million.  

 

Woolworths said hotel profits were expectantly impacted by the introduction of the Victorian gaming tax in May 2014.

 

Moving into the 2016 financial year Woolworths said it will continue to perform renovations to its hotels, upgrade menus and provide promotions like ‘little kids eat for free’.

 

Home Improvement

 

Despite increasing sales, Masters reported an EBIT $245.6 million loss.

 

Home Timber and Hardware performed better with a EBIT profit of $20.9 million, up 198.6 per cent from last year due to strong sales growth and acquisitions.

 

Woolworths Limited said that new format Masters stores had average sales at 30 per cent higher than original format stores. By the end of the 2016 financial year Woolworths hopes that 50 per cent of all stores would have been converted to the new format. The group also say it will be opening two  high potential stores at Penrith and Northmead, NSW.