Woolworths 'encouraged' after difficult period

<p>Woolworths chief executive Trevor Bish-Jones has called its half-year performance &quot;encouraging&quot;, following an &pound;8.9m drop in the group&#39;s first half losses, led by an improved retail performance. However, its wholesale business, including EUK, THE and Bertrams, had a more &quot;difficult half year&quot; caused by the &quot;level of significant operational change&quot;.</p><p>Total group sales at Woolworths for the half-year to 4th August were up by 16.1% to &pound;1,141.2m. The group half-year adjusted loss was &pound;59.2m against &pound;66.8m last year. Its loss before taxation and exceptional costs from continuing operations was &pound;64.7m compared with &pound;73.6 million in the prior year.</p><p>Bish-Jones said: &quot;Our first half performance is encouraging. The major contributor to the improved performance was the retail business, but we have made progress across all parts of the group. Going forward, we remain cautious about the retail environment going into the important second half - so are continuing to run the business tightly, with a focus on cash, cost control and margins.&quot;</p><p>The first half adjusted operating loss from Woolworths retail was &pound;47.7m, a &pound;16.8m improvement over the prior year. The group did not release sales figures, but said that strong demand for computer games, books and DVDs helped like-for-like sales - which strip out the impact of new stores - to rise 0.6%.</p><p>Its Entertainment Wholesale and Publishing division reported a &pound;9m pretax loss, which turned into a &pound;2.4m adjusted profit after stripping out the exceptional costs and amortisation charges. The business took an &pound;7.6m exceptional cost in total, &pound;4.2m of which was related to the integration of the EUK and THE businesses and the costs of the Competition Commission enquiry into the acquisition of Bertrams</p><p>Bish-Jones said: &quot;The Entertainment Wholesale business had a more difficult half year reflecting the major changes to, and added complexities within, the business. Its result was &pound;7.2m worse than the same period last year. That said, the costs of these changes have now largely been expended, leaving the business in better shape going forward.&quot;</p><p>Bish-Jones added: &quot;We are encouraged by the improved financial performance of Woolworths in the first half. We expect that our strategic initiatives such as improving our multichannel capability, the roll-out of the &#39;Worth It!&#39; range and our space reallocation plan, will continue to have a positive impact in the second half. As ever though, the key driver of our performance will be how well the business trades over the Christmas period.&quot;</p>