Australia’s largest supermarket chain Woolworths has reported a 2.1 per cent slide in sales in its Q3 Sales report released on Wednesday. In response to the decreased sales, Woolworths (ASX:WOW) said it would seek a “lean retail” model, which will cut 400 “non-customer facing” jobs by H1-FY2016. Total sales for the 13 weeks to 5 April 2015 came in at $14,956m, compared to the $15,192m from the previous corresponding period. That’s a 1.6 per cent decrease, or 2.1 per cent decrease if adjusted for Easter. Petrol sales were affected the most due to falling oil prices, falling 35.2 per cent. Excluding petrol sales, total sales increase by 3 per cent for the quarter, or 2.3 per cent when adjusting for Easter.
The biggest positive sales came in the form of home timber and hardware, with sales in the sector rising 22.1 per cent compared to the previous corresponding period. Home important also improved its sales by 21.7 per cent. Chief Executive Officer Grant O’Brien noted that alcohol sales also did not improve over the quarter. “At the half year 2015 results, we informed the market that Australian Food and Liquor sales in December and January were disappointing. While February and March showed some improvement as we commenced the actions in February, April was more subdued and there is still much to do,” he said. Woolworths also announced it would be cutting jobs in response to lower sales. Backroom workers will be cut over the next year.
Shares of WOW are down $1.47, or 4.96 per cent, at $28.16 per share. WOW has fallen 24.33 per cent in the last 12 months and 8.28 per cent so far this year.
Author: Simon Herrmann
May 06, 2015
Simon is a financial analyst at independent research firm Wise-owl specialised in small-mid cap growth opportunities and ethical investment opportunities. Simon's aim is to disrupt the cliché approach to investment decision making as he believes that socially and environmentally responsible behaviour is a necessity to long-term wealth creation. Simon has a deep fundamental understanding of the global financial landscape and has compiled 300+ research reports, valuations and corporate appraisals. Simon is commonly featured in major media outlets and his research is published weekly in The Australian.