More of the same for the year ahead was the call from major retailer Woolworths yesterday in the wake of the release of the financial year and 4th quarter sales figures.
But there was no update on earnings guidance, although CEO Michael Luscombe told the media the guidance was unchanged from February’s downgrade when the company cut its previous guidance for earnings growth of 8% to 11% in half to a range of 5% to 8%.
First half after tax profit rose 6% to a record $1.161.7 billion on a 4% (3.8% excluding petrol) lift in sales to $28.3 billion.
Yesterday the retailer reported a 4.7% rise in sales (including petrol) to $54.1 billion (4.1% up excluding petrol); thanks to a generally improved second half performance.
That improvement came mostly in the 4th quarter with supermarkets seeing a sharp rise in topline and comparable store sales, as did the company’s Big W chain, which had struggled for the previous year.
Mr Luscombe, who retires later this year, warned that the company saw little change in coming months for retailers, with cautious consumers and the high Australian dollar making life tough.
He said he could see little on the horizon that would change the weak consumer spending environment Australian retailers were experiencing.
Sales in the company’s heartland, its huge supermarket division rose 4.6% to $46.3 billion (including NZ), a record.
Growth was down from the 5.1% in the 2010 financial year, but higher than in the first half when it was 3.5%.
Comparable or same store sales grew 3%, up from the 2.2% in the first quarter, but under the 3.3% in the 2010 year.
But as small as the gains were, it was a clear improvement on the weak September and December quarters of last year when sales growth slowed to around 2%.
Woolies shares rose, closing up 20c at $27.45 after hitting a high of $27.49.
With the overall market up around 1.6%, Woolies rise was weak at around 0.7%.
Wesfarmers’ Coles reports its 2011 sales performance next week and based on its 9 month performance, will have again outperformed Woolies.
"This (sales) result has been achieved in a very challenging year for retail which saw continuing deflationary effects, the disruption caused by natural disasters, increased consumer caution and higher domestic savings rates," Mr Luscombe said in his statement yesterday.
"In a highly competitive and challenging retail environment, we have increased our market share, customer numbers, basket size and items sold in the year.
Mr Luscombe cautioned "Trading does however continue to be impacted by tightened consumer spending with higher savings rates and higher interest rates, petrol and utility prices".
In Australia, food and liquor sales for the year rose 4.3% to just over $46 billion.
In the fourth quarter alone, sales from the key division increased by 6% overall, and 4% on a comparable store basis, much, much stronger than the same quarter of 2010 when overall sales rose 2.8% and comparable store sales were up a sluggish 1.3%.
Same-store sales at Woolies’ Big W rose 2.8% in the fourth quarter and fell 0.8% for the year. Comparable store sales were down 2.5% for the year but up 2.8% (on a 5.0% lift in overall sales) in the 4th quarter.
That was better than the first half when sales were down 2.8% overall and 4.2% on a comparable store basis.
Woolies said sales trends were encouraging, reflecting the opening of new stores, strong results in the toys, menswear and home departments, and growth in optical and online sales.
Woolworths opened 21 new supermarkets in Australia during the year, bringing the total to 840 stores. It opened 19 new Dan Murphy liquor stores, bringing the total to 140.
Sales in New Zealand supermarkets rose 3.4% (4.1% in the first half) to $NZ5.4 billion ($4.33 billion), despite a challenging retail environment and the two Christchurch earthquakes.
Comparable store sales were up 3.7%, slightly ahead of the 3.5% rate at the halfway mark.
Petrol sales for the full year rose 9.9% to $6.0 billion thanks mostly to higher fuel prices and a small rise in volumes.
Annual sales of consumer electronic items in Australia were up 2.1% to $1.3 billion despite tightened consumer spending and a fall in prices on key products.
Comparable store sales rose a solid 4.2%.
The 4th quarter was weak as overall and comparable store sales fell amid discounting and the Australian dollar squeezing prices of some imported electronics goods lower (helped by manufacturer price cutting).
Hotel sales were up 4.6% to $1.2 billion, reflecting better food and entertainment offerings and higher gaming sales.
Online sales surged 63% for the year, down from the 75% growth rate reported at the end of the first half.
Woolworths said this reflected the success of the Big W online store launched in May 2010, a refreshed Dick Smith online store and the expansion of Woolworths online into new metropolitan and regional areas. A new Dan Murphy’s online store was launched in March of this year.
