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2nd December 2008

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Woolworths has "disappointing" first half

29.07.08 Anna Richardson

Woolworths Group has reported a deterioration in both sales and profit margins at its high street business over the first half of 2008, reflecting a marked worsening of conditions in the retail market through June and July.

In a trading statement ahead of its half-year results announcement, the group revealed that sales for the 25 weeks to 26th July were down 3.1%, with like-for-like sales in its retail division for the six weeks to 26th July falling by 6.7% and the profit margin for the first half of the year expected to fall by approximately 125 basis points from last year.

Richard North, chairman of Woolworths, said: "The retail business has seen a marked worsening of conditions in June and July in an increasingly competitive market. This is reflected in the sales figures for the last six weeks. In addition, sales over the first half as a whole have been achieved with a disappointing margin performance."

He added that the company had begun "detailed work" to "rebuild the retail business around the core of more profitable small and medium sized stores".

In its wholesaler business, Woolworths has decided to mark down and clear a proportion of the EUK's stock to improve future profitability, as EUK and Bertrams third-party sales for the 25 week period were down 1% compared with last year. "The programme to enhance operating efficiency following last year's major changes at EUK continues to progress well," added the statement.

2 entertain, the group's joint venture with BBC Worldwide, continued to trade strongly with sales for the 25 weeks up 12.8% compared with last year.

Meanwhile, the company board is still searching for a new c.e.o. to replace Trevor Bish-Jones, who stepped down last month.

North concluded: "Looking ahead we remain cautious about the outlook for retail given the background of a weakening consumer economy. But we have strong operational management in place in all parts of the business who are working hard to ensure that the needs of all our customers - both wholesale and retail - continue to be met."

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