Woolworths relies on food sales to claw way back to respectability

For the first-half of its 2017 financial year, sales growth in the group’s Australian food division increased by 2.8%. 

Having sold off its haemorrhaging Masters hardware chain, and jettisoned its petrol business, more focus is now on food sales. The proceeds from the sale of the fuel business will be used primarily to strengthen the supermarket’s balance sheet.

The group achieved a net profit after tax of A$725m after selling Masters and its petrol business, but endured a 16.7% fall in its continuing operations.

Chief executive Brad Banducci said the group had made good progress on its five key group priorities.

“Particularly pleasing was the improvement in sales momentum in Australian food, especially in the second quarter​,” Banducci said.

“This is on the back of strong Voice of Customer scores and is underpinned by continued growth in customer transactions and, more recently, items per basket​,” he said.

Alongside food sales growth of 2.8% for the first-half of the financial year, Woolworths said Christmas-period sales had been the strongest for the year driven by strong comparable transaction growth and improvement in items per basket.

The supermarket’s successful Dan Murphy liquor stores also had a good six months, having delivered sales growth of 4%.

“All retail formats delivered positive comparable sales growth with strong double digit growth from Dan Murphy’s Online​,” Banducci said.

In New Zealand, food sales increased by 1.6% over the corresponding period last financial year, though earnings were below last year’s profits.