Brand merger of food stores due

Fairfax Media

COMING SOON: Progressive Enterprise is expected to announce the merger of its three supermarket brands into Countdown in the next fortnight.

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Woolworths-owned supermarket retailer Progressive Enterprise is expected to announce the merger of its three supermarket brands into Countdown in the next fortnight.

The move would spell the end of the Foodtown and Woolworths brands in New Zealand.

A brand merger has been the subject of analysts' speculation in the past few months after talks with the company about the best store concept in New Zealand to compete with rival Foodstuffs, particularly its Pak'n Save stores.

To this end Progressive has been rolling out a more customer-friendly Australian store format in its New Zealand supermarkets.

Progressive is owned by Australian retailing giant Woolworths. Its chief executive, Michael Luscombe, hinted an announcement of the brand change was imminent when delivering the company annual results in Australia yesterday.

The company reported a net profit of A$1.83 billion (NZ$2.26b) on 5.4 per cent higher revenue of A$49.5b.

When asked if there was an update on the brands in New Zealand becoming Countdown, Mr Luscombe said Progressive's chief executive, Peter Smith, would be making a major announcement in New Zealand in the next two weeks.

Mr Luscombe described the New Zealand supermarket performance as a success story and affirmed Woolworths was in New Zealand for the long term.

He discounted a foray into the New Zealand hardware business after announcing plans this week to move into the Australian hardware sector.

"We are totally focused on Australia with that," he said.

Full-year sales for New Zealand supermarkets were up 3.9 per cent on a 52 v 52 week basis.

New Zealand supermarket ebit increased 17.3 per cent over the previous corresponding period in the second half to June 30 after adjusting for the 53rd week last year and for the fall of Easter in the calendar year.

Mr Luscombe said that to achieve more than a 17 per cent increase in ebit, at a time when the New Zealand economy was doing it tough, was an outstanding result.

He said 23 new sites had been earmarked for new stores in New Zealand while 13 per cent of existing supermarkets had already been converted to the new Australian format. Woolworths is spending $200m on the refurbishment in New Zealand.