Late last week Woolworths announced the results for its 2016 financial year which included its first loss in 23 years as a public company.

Woolworths has however outlined its top five priorities it will be working on across the next 12 months to help revive the retail group. The priorities are as follows:

 

Woolworths top five priorities for its 2017 financial year

1. Building a customer and store-led culture and team

• Implemented revised short term and long term performance measures aligned with our business transformation
• New Operating Model implemented with key shared service functions much closer to the customer
• All new Support Office team members now spend a week in-store (‘Woolies Welcome’)
• New tools for stores to provide feedback to Support Office
• New Chief Supply Chain Officer appointed (Paul Graham) and Chief Information and Chief People Officer appointments expected in the next few weeks
• More work to do on team capabilities, especially in Stores and Buying

2. Generating sustainable sales momentum in Food

• Strong Voice of the Customer results in June with record Overall Customer Satisfaction
• Comparable transaction growth of 1.4% in Q4’16 with positive item growth from June
• More competitive prices across the store with average prices 2.3% lower in FY16 and over $500 million investment in FY16 relative to FY15
• Incremental investment in team hours, particularly on the weekend
• Significant progress in new own brand strategy with Essentials and Woolworths brand transitions well underway
• More work to do on Supplier engagement and joint business planning

3. Evolving our Drinks business to provide even more value and convenience to customers

• Strong performance from 11 new Dan Murphy’s opened during the year
• Dan Murphy’s business model continues to evolve with investment in a new in-store wine format, My Dan Murphy’s loyalty program and the launch of Dan Murphy’s Wine Cellar
• Strong double digit sales growth from Dan Murphy’s online
• BWS local empowerment-driven business model resonating with customers and team alike

4. Empowering our portfolio businesses to pursue strategies to deliver shareholder value

• Colin Storrie appointed Group Portfolio Director and Boards established on all portfolio businesses
• Separation well underway with Sourcing, Quality, Logistics, Property and IT all being integrated back into the individual businesses
• Exploring options for the sale of EziBuy
• BIGW early in its turnaround, with lots more to do

5. Becoming a lean retailer through end-to-end process and systems excellence

• Merchandising platform now stable, SuccessFactors Human Capital Management system now live, 1 Store Program in roll-out
• End-to-end process improvement initiatives underway across the business – Faster Fresh, meat processing model, on-shelf availability, store IT support, store maintenance
• Over 500 support office and supply chain roles to be removed
• More work to do on generating a productivity dividend from new IT systems implementation

 

Woolworths $1.2 billion loss

 For Woolworths 2016 financial year the group reported a AUD $1.2 billion loss after AUD $2.6 billion worth of writedowns.

Reflecting on the results, Chief Executive Officer of Woolworths, Brad Banducci, said the 2016 financial year was one of unprecedented change for Woolworths.

“We are seeing early signs of progress as we work to restore our competiveness and improve our culture in Australian Food. We have also addressed significant issues facing the Group with the decision to exit Home Improvement and decisive action taken on BIGW to reposition the business,” Banducci said.

Woolworths supermarket performance

Australian supermarket sales for the year were AUD $34.8 billion, a decrease of 0.2 per cent on the previous financial year.

Woolworths however said that its customers were noticing improvements in supermarkets with its ‘Voice of Customer’ satisfaction score improving to record levels.

Across the financial year, Woolworths said it continued to lower prices, investing AUD $500 million in doing so (including stopping price rises).

Petrol

Petrol sales for Woolworths reached AUD $4.6 billion, a decrease of 18.1 per cent when compared to the prior 12 months.

Woolworths attributed the drop to changes in its alliance with Caltex and declining average fuel sell prices.

Liquor

Woolworths’ liquor stores, including Dan Murphys and BWS, performed well increasing sales by 4.7 percent on the prior 12 months to AUD $7, 589 million.

“We are committed to strengthening our leading position in Drinks,” said CEO Brad Banducci.

Masters and Home Timber and Hardware

Woolworths used the financial results update to announce all Masters stores will be closing prior to 11 December 2016.

Masters sales for the financial year were AUD $1.1 billion, an increase of AUD $21.8 per cent on Woolworths’ 2015 financial year.

Home Timber and Hardware, recently acquired by Metcash, had AUD $967 million in sales for the year, a 3.2 per cent increase on the prior 12 months.