Retail Woes Slash Woolworths Profit

Australian grocery chain Woolworths has announced a 17 per cent slide in profit for the first half of the financial year despite solid growth across most of the business. Net profit for the six months to December came in at $967 million, but this was in line with expectations. Chief executive Grant O’Brien said the result was mainly due to the divestment of its Dick Smith electronics chain.

“We’ve taken a once-off charge for the consolidation and divestment of the Dick Smith business but our trading businesses have actually been profitable – and I think pleasingly profitable – this year,” Mr O’Brien said.

Price cuts at supermarkets as part of its discount war with rival Coles also dampened profits. ”Deflation, whilst challenging for a retailer, is great news for consumers, and I think that’s how it should be looked at,” Mr O’Brien said.

A fall in earnings at Big W also weighed on the result, while food, liquor and petrol businesses saw growth of around 6 per cent. ”There’s still more work to be done,” Mr O’Brien said. “We’re enhancing our position as Australia’s fresh food people and the home of national brands. At the same time we’re improving costs and the customer experience in our stores.”

Australian Retailers Still Concerned Despite Mild Upturn

Our least favorite retailer Harvey Norman’s half-year profits have slipped amid intense competition in the retail sector, consumer caution and a slowing economy. Net profit came in at $129 million, down 2 per cent on the year before. The discount retailer also reported falling sales in the period, with same-store sales in its Australian shops down 6.5 per cent, while the chain’s European outlets saw a slide of 15 per cent.

Co-founder and chairman Gerry Harvey says his company is struggling, as are many other retailers. “You are now seeing more retailers go broke and out of business than I have ever seen in my life,” Mr Harvey said. “In the last 12 months you have seen Colorado, Dick Smith and Retravision. This technology area in retail is really under huge pressure, so we have to reposition, because if we don’t we’ll end up going out the back door like WOW.”

Electronics chain WOW Superstores was placed in receivership on Monday with debts of more than $25 million.  Administrators say WOW Audio Visual Superstores could be salvaged if a buyer is found quickly. The electronics retailer has been placed into receivership with debts of more than $25 million. WOW launched its first store in Townsville in north Queensland nine years ago and currently operates 15 stores across Australia. Ten are in Queensland. The company employs 500 staff across Australia. James Stewart from administrators Ferrier Hodgson says everything will be done to save the chain. Read the full article »»»»