Woolworths shares eased a little yesterday on investor concerns about higher costs from the supermarket giant’s battle to withstand the impact of the COVID-19 pandemic and lockdowns.
Similar concerns were expressed by silly investors and analysts about Coles. Clearly those with the concerns have not been in the real world in the past couple of months to understand the clear signs of extra spending by the retailing giants on cleaning, staff, resupply, and security.
Woolies yesterday made it clear there would be an extra cost at the end of the financial year for staff.
CEO, Brad Banducci said in the company’s third-quarter sales report that “This has been a real team effort and we expect to pay a recognition bonus to our permanent front-line team members at the end of the financial year to reflect their over-and-above efforts.”
Chief executive Brad Banducci said the last four months had been some of the “most challenging periods” in Woolworths’ history, and warned the COVID-19 crisis was far from over.
“Our team has played a critical role during these unprecedented times and while the outlook for the rest of the financial year is uncertain, we remain in a strong operational and financial position,” he said.
That sort of reward reference was missing from the Coles third-quarter report.
The shares ended at $35.75, down 0.7%. They were as low as $34.89 as some investors got snitty about the shortfall and higher costs.
The shares rose 0.065% in April to be down by just 1.1% year to date.
Comparable sales across the company’s supermarkets division rose 10.3% thanks to the coronavirus-driven panic buying and hoarding.
That fell short of market forecasts for growth of 11.8% and below Coles’ rise of 13.1%.
Overall revenue for all of Woolworths’ divisions in the three months to the end of March rose 10.7% $16.4 billion, up 10.7 percent when compared to the same quarter last year. Food sales made up $11.1 billion of its total revenue.
The struggling department store Big W posted a surprisingly solid 9.9% increase in comparable sales despite worries shoppers would avoid the discount retailer amid stay-at-home orders. Woolworths said it still expects to make a “small profit” at Big W for the 2020 financial year.
The company’s Endeavour Drinks division, which includes liquor sellers BWS and Dan Murphy’s, saw comparable sales jump 8.9%, driven almost entirely by hoarding purchases in March.
Woolworths’ hotels and pokies division was the largest hit as the government-mandated closure from early March of venues forced the company to shut doors, causing total sales to drop 12.9%.
