Woolworths' NZ supermarkets lift annual earnings 4.2% in 'subdued' conditions

Woolworths chief executive Grant O'Brien

Australian supermarket chain Woolworths lifted annual earnings from its New Zealand Countdown stores 4.2 percent as it widened margins in what it called "subdued" trading conditions.

Pre-tax earnings before one-off items rose to $309.8 million in the 52 weeks ended June 29 from $302.7 million in the 53-week period in 2013, the Sydney-based company said in a statement. Sales rose 1.6 percent to $5.74 billion from a comparable 52-week period, while gross margin widened 37 basis points to 23.67 percent.

"Countdown supermarkets delivered a pleasing result despite the subdued New Zealand grocery market conditions," Woolworths chief executive Grant O'Brien said. "The transformation of this business is well underway with its focus on delivery enhanced value to customers, most notably via the 'price lockdown' campaign which has resonated strongly with customers."

Government figures this month showed retail spending at grocery stores and supermarkets rose 1.4 percent to $17.04 billion in the 12 months ended June 30 from a year earlier. Consumer prices for grocery food rose 1 percent in the three months ended June 30 from a year earlier.

Woolworths said the small sales increase reflected subdued market and price deflation across several key categories. Still, it managed to widen margins through better buying and promotions, and changes in its sales mix.

"We have continued to improve our competitiveness in the market and have lowered prices on everyday product lines to deliver increased value to our customers," it said.

The New Zealand unit made a bigger contribution to the group due to the strong kiwi dollar, and lifted earnings 17 percent to A$271.4 million. Group earnings before interest, tax and significant items rose 3.3 percent to A$3.78 billion, while net profit advanced 8.5 percent to A$2.45 billion. Sales rose 5.9 percent to A$60.8 billion.

The ASX-listed shares of Woolworths fell 1.2 percent to A$36.52, and have gained 9.2 percent this year.


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