The Bookseller.com

8th September 2008

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Wholesalers drive Woolies

02.04.08 Philip Jones

Woolworths' wholesale business delivered strong third-party growth at the group, helping offset declining like-for-like sales at its retail shops, results released today show.

In the 52 weeks to 2nd February 2008, the wholesale business, including THE, Bertram, and EUK, grew sales by 36.6%, taking total third party sales to £1.18bn. Total like-for-like sales at Woolies' retail shops declined by 3.2%, with actual sales of £1.7bn, down £95.8m on the year before. At the group level, total revenue from continuing operations was £3bn, representing an 8.5% increase over the prior year.

Profitability at the wholesale division was held back by additional costs of £8.4m, associated with the integration of three companies. "These costs held back profitability but by their nature will not reoccur in the coming year and accordingly we expect to make progress in 2008/9," the company said. The adjusted profit of EUK together with THE and Bertram was down £0.4m on the previous year, however adjusted profits from the Entertainment Wholesale and Publishing units amounted to £54.8m compared to £53.1m in the previous year, as a result of a "highly successful year" from 2 entertain, Woolworths' joint venture with BBC Worldwide.

Woolies said that book sales held up well in the year, and it anticipates "that this will continue in the medium term".

The adjusted profit at its retail shops was £3.4m compared with a loss of £12.9m in the prior year. The group said: "The prime objective for the year was to enhance profitability. This was achieved as we continued to improve cost performance, worked hard to deliver profitable sales and continued to focus on enhancing both the service and product offer for our customers. We now have a base on which to build for the coming years."

For the group, profit before tax and exceptional items increased to £14.9m from £7.3m in the prior year.

Trevor Bish-Jones, chief executive, said: "We have made good progress over the past year. We are particularly pleased that Woolworths Retail has returned to profit in a year in which our markets remained volatile and fiercely competitive." He added: "Whilst current like-for-like sales are up against last year, the much earlier Easter makes the like-for-like comparisons meaningless. It is early days and the retail environment is likely to remain challenging in the current year. We will, therefore, continue to manage the business tightly."

Retail Financial Philip Jones Bertrams EUK woolworths THE