Friday, July 26, 2024

Woolworths Group announces strong momentum in H2

Woolworths Group announced its full year results for the period ended 26 June 2022.

Woolworths Group CEO Brad Banducci said: “The extremely challenging operating environment caused by supply chain disruptions, product shortages, team absenteeism and flooding led to an inconsistent customer experience and a financial performance that was below our aspirations for the year. However, I am proud of how our team continued to show great care for our customers and each other and ongoing resilience to deliver a strong Christmas, and materially improved trading momentum in H2. Importantly, we were also able to continue to progress our strategic and sustainability agendas and I am confident that, as we enter F23 with a renewed sense of purpose, we will be able to navigate ongoing uncertainties and challenges to deliver for all of our stakeholders.

“F22 sales grew by 9.2% or 5.1% excluding PFD and Quantium. In H2, Group sales increased by 10.5% (6.2% ex PFD and Quantium) with improved momentum in all segments other than New Zealand Food. F22 Group EBIT declined 2.7% reflecting higher COVID-related costs in H1 in Australian Food and in H2 in New Zealand as well as BIG W store closures. In H2, Group EBIT increased 8.1% with H2 Australian Food EBIT up 9.7% after a 7.6% decline in H1.”

Mr Banducci continued: “In Australian Food, our customer experience throughout the year was inconsistent, impacted by supply chain disruption and product availability issues. Pleasingly, our Customer Care metric remained strong across all our businesses, and Brand and Reputation scores also remained strong reflecting the focus on our purpose and trying to do the right thing. Australian Food sales increased 4.5% in F22 with above-market growth in every quarter of the year. A much-improved EBIT result with growth of 9.7% in H2 led to a small increase in EBIT of 0.3% for the year, after a challenging first half.”

“Woolworths Retail (stores and eCommerce) sales increased by 4.3% for F22. H2 sales increased by 5.5% (3-yr CAGR: +5.2%) driven by eCommerce sales growth of 33.6% and Woolworths Supermarkets store-originated sales returning to growth in H2 of 3.1% (Q4: 3.9%). H2 sales growth was consistent across the country and by store segment (Core, Value and UP) with food inflation increasingly contributing to growth. Average prices in Q4 F22 increased by 3.6% compared to the prior year whereas in Q1 F22 average prices declined by 0.9%.

“WooliesX B2C eCommerce sales growth remained strong, up 42.3% to $4.7 billion in F22, representing 10.3% of Woolworths Retail sales. Growth slowed a little in H2 compared to H1 as customer mobility increased but growth rates and penetration remained high. After enormous pressure on the team from heightened demand, absenteeism and supply chain challenges, our customer experience improved materially in Q4 with VOC NPS up 11 points on Q3. eCommerce directly-attributable profit margin increased in F22 due to increasing scale and improved efficiency,” Mr Banducci said.

Cartology, the Group’s retail media business, also delivered strong revenue and profit growth during the year.

“Metro Food Stores sales increased 6.0% due to new store growth with five net new stores opened during the year and increased traffic in On the Go stores. Woolworths Food Company’s own and exclusive sales increased by 4.8% with the COOK, BBQ and Macro ranges growing strongly, despite growth being constrained by availability issues in the Household and Snacking categories,” he said.

“Australian B2B strong sales growth rates reflect the acquisition of PFD at the beginning of the financial year and the first-time inclusion of Endeavour Group partnership revenue. On an underlying basis, all B2B businesses reported higher sales in F22 despite continued COVID disruptions. H2 EBIT of $24 million improved on H1 with a full year EBIT contribution of $42 million and a strong H2 contribution from PFD.

“New Zealand Food had a very challenging second half with a material disruption to stores and supply chain as Omicron gained hold and market growth slowed. While sales increased by 5.8% in F22, H2 sales growth slowed to 3.1% (Q4: +2.3%) which, together with higher Covid-related costs, led to a decline in F22 EBIT of 12.5%. A highlight for the year was the progress in New Zealand Food’s supply chain transformation with the opening of the Hilton meat plant in July 2021, Palmerston North DC in August 2021, and Auckland Fresh DC in June 2022,” he said.

“Despite a first half where many BIG W stores were closed for an extended period due to Covid restrictions, BIG W maintained strong customer scores throughout the year. Growth recovered strongly in H2 with Q4 sales growth of 11.9%.

F22 EBIT of $55 million was 68.2% below the prior year largely reflecting the challenges in H1, with H2 EBIT of $30 million exceeding H1 EBIT of $25 million. eCommerce sales growth remained strong in H2 at 17.6% but penetration moderated from the record penetration of 17.7% in H1 to 9.7% in H2 as more customers returned to shopping in store.

“Other now includes Woolworths Group’s investments in Endeavour Group and Quantium, as well as Group costs not allocated to other segments. Other net costs were $123 million for the year, $46 million below the prior year reflecting the benefit of a full-year contribution from Quantium and the first-time inclusion of our share of net profit after tax of Endeavour Group, offset somewhat by higher Covid costs including the $34 million Team Thank You bonus,” Mr Banducci said.

“Following a strengthening of our partnership with Quantium in late F21, we launched wiq to bring together Woolworths Group’s and Quantium’s data analytics capabilities. wiq is currently working on over 20 advanced analytics use cases across the Group and has made solid progress in key strategic areas like promotional optimisation, tailored ranging and store and eCommerce process efficiency.

“We made good progress in reshaping the Group and building out our Food and Everyday Needs Ecosystem. We completed the demerger of Endeavour Group at the beginning of the financial year and on the same day completed the acquisition of 65% of PFD in partnership with the Smith family. We have built Australia and New Zealand’s largest 1st party eCommerce business and are building our 3rd party marketplace capability through Everyday Market and MyDeal (subject to completion). Growth to our digital properties continues with 19.4 million average weekly visits to Woolworths Group websites and apps in F22. Everyday Rewards is one of Australia’s largest and increasingly most loved loyalty programs and the staged rollout of our new real-time loyalty platform is materially improving personalised offers for our customers. Our retail media business, Cartology, continues to grow rapidly and we are looking forward to Shopper Media Group complementing our existing platform (subject to completion). Finally, we are incubating a number of digital start-ups such as PetCulture, HealthyLife and Metro60 that are driving innovation for our Group as we continue to learn from, and invest in, their growth and development,” he said.

Related Articles

Stay Connected

533FansLike
944FollowersFollow
699FollowersFollow

Subscribe to our newsletter

To be updated with all the latest news, offers and special announcements.