Woolworths' NZ stores performing well

Date AddedSeptember 16, 2009 12:49:38 AM

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Woolworths' NZ stores performing well

Woolworths said it is satisfied with the performance of its New Zealand supermarket business, particularly in the second half of the year.

The company's New Zealand Supermarkets, which include Countdown, Foodtown and Woolworths stores, notched up annual earnings before interest and tax (Ebit) of $NZ194.9 million, up 2.8 percent from last year.

The previous year had 53 weeks, so the rise is 4.8 percent if a 52-week comparison is used.

"Particularly pleasing was the improvement in the second half of the year, with trading Ebit increasing 17.3 percent over the second half last year and comparable sales in the last quarter increasing by 5.5 percent," the company said.

The company competes with Foodstuffs, a co-operative which runs New World, Pak'n'Save and Four Square stores.

Foodstuffs and Woolworths together have about 96 percent of the grocery market and they each have blocking stakes in general merchandise retailer The Warehouse.

In Australian dollar terms the Ebit of Woolworths' New Zealand supermarkets was $A153.9m, down 9 percent on last year, or down 7.4 percent on a 52-week comparison.

Sales were $NZ4.96 billion, up 3.9 percent on a 52-week comparison. The gross margin rose three basis points to 21.9 percent and the company attributed this to improved buying.

Woolworths bought Progressive Enterprises in late 2005 and said then it would take three years to put the supermarkets in a competitive position.

It said today that the repositioning of the business was on track but "there remains much to do".

The work programme so far has included putting Australian supermarket systems in place, overhauling work practices, harmonising buying terms, increasing the focus on fresh product in stores, introducing private labelling, improving the supply chain and refurbishing stores.

The company said it had 23 sites in the pipeline in New Zealand with three opening in 2010.

One new Countdown store and two franchise stores were added during the year, increasing the company's selling space by 2.5 percent. "There is a solid opportunity to add additional trading space over the next five years with new stores and additional trading space from our refurbishment programme, with 72 of our supermarkets being less than 2000sq m," the company said.

"Overall New Zealand has a balanced result in an economy that has had five quarters of GDP decline," Woolworths said.