Huge losses at Australian retail giant Woolworths
Australian supermarket giant Woolworths on Thursday reported a large annual net loss of Aus$1.23 billion (US$940 million), its first since listing more than two decades ago, following a failed push into hardware and a slump in food sales.
Woolworths, Australia’s largest retailer and one of the two dominant supermarket chains in the country, recorded the sharp plunge for the year to June 26 — the first loss since 1993, compared to a net profit of Aus$2.15 billion in the prior period.
The company said Wednesday it was exiting the disastrous Masters home improvement business seven years after entering the hardware market, selling it for Aus$1.5 billion. “Unequivocally it’s been a challenging year for the group — in this case the numbers speak for themselves,” The Australian Financial Review quoted Woolworths chief executive Brad Banducci as saying.”But you need to look through the numbers to see where we are — we are making progress but there’s still a lot to do.”
Australian food and petrol sales sank 40.8 percent to Aus$1.76 billion for the period, while its discount department store chain Big W lost Aus$14.9 million after last year’s profit of Aus$111.7 million. The weak results also demonstrated the fierce competition that the company, which is unrelated to South African department store Woolworths Holdings, has faced from rival Coles and German retailer Aldi.
“It’s the combination of a number of years of neglect — Woolworths is a really stellar example of corporate mismanagement,” IG Markets’ analyst Angus Nicholson told AFP.
“They were clearly losing out on a lot of sales over the years as consumers increasingly realised that they were getting much better price opportunities over at Coles… and it took a while for Woolworths to really start turning around and focusing back on price.”
Investor optimism that Woolworths has seen the worst with these results were reflected in the company’s share price, which was trading 5.0 percent higher to Aus$25.43 in Sydney on Thursday. The embattled retailer, which shed its chairman and chief executive and announced thousands of job cuts last year, announced a final dividend of 33 Aus cents a share, compared to 72 cents last year.