Woolworths' NZ Countdown chain lifts FY earnings 3.5 percent as market remains ‘challenging’

Wednesday 28th August 2013

Australian supermarket chain Woolworths lifts annual earnings at its New Zealand Countdown stores by 3.5 percent as it grabbed market share in a "challenging" trading environment.

Normalised earnings before interest and tax, which strips out an extra week of trading in the 2013 year, rose to $302.7 million in the 12 months ended June 30 from $287.4 million a year earlier, the Sydney -based company said in a statement. Earnings were dragged down by a $7.7 million charge for extra rental costs after the group spun off its real estate assets into SCA Property Group.

Normalised sales climbed 2.3 percent to $5.75 billion, opening eight new stores in the year and closing three, and gross margin widened 3 basis points to 23.3 percent.

"This is a solid result given the New Zealand retail environment has been characterised by low growth and low inflation with retail trading conditions increasingly challenging during the year," the company said.

Government figures earlier this month showed New Zealand retail spending on supermarket and grocery items increased 0.4 percent to $16.81 billion in the 12 months ended June 30 from a year earlier. Consumer prices for grocery food fell 1.5 percent in the three months ended June 30 from the same period in 2012.

Woolworths lifted group profit 24 percent to A$2.26 billion on sales of A$59.16 billion, as it came from a lower base when it wore a A$383.7 million impairment charge on the now divested Dick Smith Electronics unit.

Last week the Australian company bought New Zealand apparel and homeware retailer EziBuy for $350 million in a deal it expects will act as a launching pad for Woolworths' next growth phase, leveraging on its direct marketing via online and catalogue sales.

The ASX-listed shares gained 1.5 percent to A$34.38 in trading today, and have gained 16 percent this year.

BusinessDesk.co.nz

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