Shareholders gave Woolies an initial thumbs up via a higher share price in early trading in a weaker wider market after the retailer revealed a $2 billion off market share buyback.
In addition to this buyback shareholders will get a higher final and full year dividend after it emerged from the Covid ravaged 2020-19 financial year stronger than ever before.
The company told the market on Thursday it will pay a final dividend of 55 cents a share, up from 48 cents a year ago.
That took the total for the year to $1.08 a share, up from 96 cents previously.
And if Woolies shareholder kept their Endeavour group shares, they would have picked up another 7 cents a share.
The shares rose more than 2% to $41.72, but then eased when the company raised doubts about supply problems for the Christmas end of year selling season because of logistic bottlenecks, especially across China and the rest of Asia.
That knocked the share price lower and became a form of guidance for the December half, even though the company did not make any forecasts about the coming months.
The shares ended the session in the green: up 0.4% at $40.99.
CEO Brad Banducci said in the financial results:
It was another challenging year for our team and communities but also a year where we achieved a lot together. COVID will continue to have a profound impact in F22 but making any further predictions about the year ahead remains very difficult.”
Earlier this week we saw a number of companies shares punished for giving an outlook at weak as that from the CEO, but Woolies was convincing.
But he later comments on potential supply problems later this year changed attitudes among investors.
In addition to the rewards, the company’s trading performance in the year to June was also convincing, especially given the disruption caused by Covid and especially by its Delta variant at the moment.
The company saw sales growth of 5.7% to more than $67 billion (including the de-merged Endeavour grog group).
Online sales jumped 58% to more than $5.6 billion for the year to June.
Group earnings before interest and tax rose 13.7% to $3.66 billion and group after tax net profit rising 22.9% on the prior year to $1.972 billion.
Woolworths CEO, Brad Banducci, said in a statement that “The Delta variant of COVID has seen the operating environment change rapidly in the last three months. We are working hard to protect our team and continuing to provide food and everyday needs for our customers and the communities which we serve.
“It has become clear that vaccination is key to the safety of our team and the easing of restrictions, and we are committed to supporting vaccination efforts across the broader community.
“I want to express my deep gratitude to our team as they continue to demonstrate care for each other and our customers, and acknowledge the Government and industry for their support as we work through these challenging times together.
“F21 was a significant year in the history of Woolworths Group and one we can look back on proudly. We farewelled our Endeavour Group colleagues at the end of June following a multi-year journey to separate the business. It was a bittersweet moment but we are confident it was the right decision to enhance value for our shareholders.” the CEO said.
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Meanwhile, Woolies’ recently de-merged drinks, pubs and pokies business Endeavour Group is upbeat about the outlook for 2021-22 despite current the continuing uncertainty caused by the Covid Delta lockdowns in NSW and Victoria, its two biggest markets.
Endeavour, which owns and operates Dan Murphy’s, BWS and a number of pubs and hotels, reported its maiden full-year result on Thursday after de-merging from parent company Woolworths in June.
It was a result wholly due to the benefits of its time in the final year of its ownership.
Sales rose 9.3% to $11.6 billion and Endeavour saw a 22.1% jump in earnings to $899 million.
Shareholders in the group will receive a maiden dividend of 7 cents a share.
From now on it will be the company’s management and board responsible for business.
The start of the new year has been made rougher by the lockdowns. Endeavour said that the first eight weeks of the 2022 financial year saw sales drop 1.7%.
But this suffered from a high comparative base for sales in the same period of 2020.
Hotels continue to be a major problem, especially in NSW and Victoria due to lockdowns and closures, with sales falling 7.3% in the first eight weeks.
CEO Steve Donohue though was confident despite the ongoing difficulties due to the pandemic.
“The recent COVID-19 trading restrictions, which began in June, make it extremely difficult for us to forecast with any degree of certainty how our businesses will perform over the next 12 months,” he said.
Endeavour shares fell 2.2% to $7.05 because of the absence of a forecast and the continuing disruptions from Covid Delta.
