Woolworths NZ profits fell 52 per cent in the last year, but still came in at $76 million.
Woolworths NZ profits fell 52 per cent in the last year, but still came in at $76 million.
Woolworths New Zealand’s profits dropped 52 per cent in the last full year, with rising costs pushing up operational costs for the grocery retailer.
The NZ arm of Australian-owned supermarket giant Woolworths still came out with $76 million in profit for the year, down from $158.4m for the same periodlast year.
Woolworths NZ Group owns local retailers Countdown, SuperValue and FreshChoice, and posted its New Zealand financial statements to the Companies Register on Friday for the full year to June 25.
The ASX-listed supermarket’s New Zealand revenue was up 4.5 per cent on last year, coming in at $7.9 billion.
Cost of sales in NZ were up 4.7 per cent, going from $5.8b to $6.1b this year, while income tax fell 41 per cent on last year, going from $49.9m to $29.4m.
First Retail Group managing director Chris Wilkinson said the result shows the supermarket is “trying to get the balance right” to give customers the right prices on shelves.
“It’s a challenging time for all retailers, but it’s very evident in this situation, with [Woolworths] navigating variable and constantly increasing prices from suppliers,” Wilkinson told the Herald.
In-store sales revenue was up 6.3 per cent, coming in at $6.3b, with online sales dropping 2.8 per cent to $1b.
“The small decline in e-commerce reflects customers tightening their belts, and those using premium services for delivery are choosing to shop in-store to mix up where they are buying groceries from,” Wilkinson said.
“It reflects trends across retail where people are making better choices about what they spend their money on.”
In the report, directors Spencer Sonn and Stephen John Leigh Harrison said directors have “a reasonable expectation that the group has adequate resources to continue in operational existence for the foreseeable future”.
Woolworths Group’s shares have traded at roughly flat levels over the last year, with its share price trading around A$35.03 on the ASX.
In August, Sonn said in a statement, “High global inflation, ongoing supply chain issues and, closer to home, devastating weather events have all had a material impact on our business and affected our performance during the year.”
First Retail Group managing director Chris Wilkinson. Photo / Mark Mitchell
The group’s net liability fell 53 per cent to $721m in the last year, which Sonn and Harrison said “is principally due to the fast-turning nature of inventories, the timing of payments to suppliers and the use of available funds to support investments that are classified as non-current assets”.
Sonn and Harrison said the company plans to accelerate the refurbishment of its stores, which includes a rebrand from Countdown to Woolworths over the next three years.
Sonn said the retailer has been “working hard” to meet customers’ needs and expectations, and it was time to accelerate that change.
“In the coming months and years, you’re going to see us bringing the best of the Woolworths brand across the Tasman, and equally sharing the best of what we have here with the broader Woolworths Group,” he said.
“We’re changing for the better, and a name change for our stores is just one part of that.”
Woolworths managing director Spencer Sonn.
Woolworths Group chief executive Brad Banducci added that the rebrand meant the grocery giant was “doubling down” on its transtasman connection, including with the launch of a “refreshed” loyalty programme – Everyday Rewards – which Banducci said was focused on providing more value to customers.
Wilkinson said Woolworths’ major investments, including the dark store in Devonport and continued investment in e-commerce, “stand out” for consumers: “They have created a dedicated channel for e-commerce, unlike other places who have been running it as an adjunct alongside the supermarket model.”
“That will come at a cost, but they’re delivering a better shopping environment, which shoppers do value,” Wilkinson said.
The supermarket giant confirmed to the Herald it had applied for consent from Auckland Council to open a “Direct to Boot” facility at a small site it owns on Lake Rd in Devonport.
Woolworths New Zealand director of property Matt Grainger said it will be the first example of a stand-alone facility with no supermarket attached.
“The facility will enable customers to order groceries online and pick them up locally within Devonport,” Grainger said.
Woolworths is rolling out its free Direct to Boot service (which has a minimum order requirement of $50) across the country following a trial this year.
Alka Prasad is an Auckland-based business reporter covering small business and retail.
