Woolworths boosts interim profit

23:12, Aug 14 2013

Countdown owner Woolworths has boosted first-half pretax earnings in New Zealand by 9 per cent to $162 million, despite low growth and inflation in the supermarket sector.

Sales for the six months to the end of December firmed 2.3 per cent to $2.9 billion. The supermarket owner said the strong result reflected growth in market share, customer numbers, and the value and volume of units sold.

"The result is underpinned by our strong brand, new store formats and continually improving offers," the company said.

Growth was kept in check by low inflation in its own food price index - at 0.1 per cent compared with 1.7 per cent the previous first half - due to falling prices for dairy and dry grocery products and more frequent promotions.

It said year-on-year growth had also been restricted by the impact of the Rugby World Cup in the previous first-half.

Gross margin- the percentage of total sales revenue retained after the cost of selling goods is subtracted - increased to 23.28 per cent, from 23.02 per cent.

Woolworths said that was due to more effective promotional activity, partnering with suppliers, reductions in shrinkage and increased global direct sourcing.

"We have continued to be competitive in the market with a number of cost savings passed on to customers through lower shelf prices."

Countdown's online sales grew 36 per cent year-on-year, and downloads of its smartphone shopping app had tipped over 200,000 since its launch last financial year.

It said the appeal of the Countdown brand continued to grow. The company rebranded the last of its Woolworths supermarkets to the budget-friendly Countdown brand in 2011.

It now has 165 supermarkets in New Zealand, after opening four in the half-year. A further four will be opened by the end of June.

It has refurbished three-quarters of its stores to modern formats.

Including its Australian operations, Woolworths posted a 19.4 per cent increase in half-year net profit to A$1.15b (NZ$1.42). Profit from continuing operations and significant items was A$1.24b, up 5.5 per cent.

Woolworths reported a 29 per cent leap in New Zealand net profit to $128.9m in the year ended June 24.