Profit warning for Woolworths
Canterbury's earthquakes have contributed to an earnings shake-down at Australia's largest supermarket chain.
Canterbury’s earthquakes have contributed to an earnings shake-down at Australia’s largest supermarket chain.
Woolworths, which operates the Woolworths and Countdown supermarkets in this country, has cut its full-year net profit rise guidance to a range of between 5-8%, from 8-11%, due to uncertainty posed by Queensland foods and the series of earthquakes in Canterbury.
The grocery giant, which also owns the Dick Smith consumers electronics stores, released the earnings upgrade today, reporting a 4% rise in total first-half sales to $A23.9 billion, for the six months to January 2.
Sales from its New Zealand supermarkets rose 4.1% to $NZ 2.8 billion.
Woolworths said customer’s discretionary spending had taken a hit from lower consumer confidence, inflation, high interest rates and global economic uncertainty.
That uncertainty would continue into the next half-year, and risks associated with the Australian floods and Christchurch earthquakes had created a “potentially subdued trading environment”, the retailer said.
While most costs from natural disasters on both sides of the Tasman would be covered by insurance, there would be excess to pay on policies and some items would not be covered in such extreme natural disasters.
"Given the complexity of these insurance claims, a clear view of these costs could take many months to complete and will impact in the second half."
Last year sales Woolworths earned $NZ4.957 billion from its New Zealand supermarket business, up 4.6% on the year before.
Woolworth's biggest rival here is the locally-owned Foodstuffs co-operative which operates the New World and Pak’n’Save supermarkets.
Georgina Bond
Mon, 24 Jan 2011
Mon, 24 Jan 2011
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Profit warning for Woolworths
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