Woolworths reports almost $1 billion loss

Supermarket giant Woolworths has reported a first half net profit loss of $972.7 million, its first loss since listing on the Australian Stock Exchange more than 20 years ago.

Earnings before interest and tax fell by 190.5 per cent to a loss of $1.79 billion. Total group sales saw a decline of 1.4 per cent to $32 billion.

Australian food and liquor sales were $22.3 billion, up 0.7 per cent on the same period last year, but comparable sales decreased by 0.8 per cent. Petrol sales plummeted by 23.8 per cent to $2.5 billion.

Woolworths said its petrol and convenience sales were impacted by the changes to the Woolworths-Caltex alliance, where sales from 131 Caltex operated sites are no longer recognised by Woolworths, as well as declining average fuel prices.

Comparable petrol sales decreased 11.7 per cent due to the impacts of declining global oil prices. Woolworths also recorded a decline in comparable volumes of 2.0 per cent.

Chairman Gordon Cairns said: “We are rebuilding the Woolworths business. While we have made progress it will be a three to five year journey and there is much to do.”

Growth in non fuel categories continued, with total merchandising sales for the half year increasing 8.5 per cent and comparable merchandising sales increasing 5.7 per cent.

In the six months to January 3, Woolworths invested in forecourt improvements to 96 sites, bringing the number of sites completed to date to 422. The company also reduced the prices of core merchandise lines as introduced “Low Prices Always” across its key value lines.

Woolworths said it also rolled out the Metro format across its urban food store network, and opened five new petrol sites, taking the total number of Woolworths-owned sites to 521.

The company plans to open a further 10 new sites in H216, while also continuing to refine its Metro model and focus on new categorises and promotional offers.

Woolworths names new CEO

Woolworths has also appointed its head of supermarkets Brad Banducci as new CEO and managing director, effective immediately.

Mr Banducci has been managing director of Woolworths Food Group since February 2015. Prior to this he was managing director of Woolworths Liquor Group and director of Liquor. Mr Banducci joined Woolworths in 2011 after the acquisition of the Cellarmasters Group, a wine direct retail and production company. He was CEO of Cellarmasters from 2007 to 2011.

Mr Banducci appointment follows several key management changes at the company in recent months. In January Woolworths appointed GM of operations for Dan Murphy’s Angus Armstrong as acting director for fuel and convenience, including the Woolworths Metro network. Armstrong took over from Woolworths’ former head of petrol and convenience Michael James who was appointed director of stores.

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