Woolworths' New Zealand supermarkets earn more but still struggle
The financial performance of Woolworths' New Zealand supermarkets improved over the June year on higher sales despite a slowdown in the second half of the year.
Woolworths New Zealand supermarkets reported improved financial performance in the June year, driven by higher sales despite a challenging second half. The chain experienced the most growth in the first half, but earnings declined in the latter half, attributed to a shift towards value-focused shopping and disruptions from a new store operating model.
Managing Director Sally Copland emphasized the company's commitment to providing affordable products and shielding customers from higher prices. This commitment includes absorbing costs to maintain low prices, not passing on increased red meat costs, offering promotions for fresh food, and providing special deals through its rewards scheme.
In order to deliver value to Kiwi families and sustain the business in a competitive market, Woolworths New Zealand must also operate efficiently. Gross margins fell as the company invested in expanding its customer base and experienced increased stock losses due to changes in store operations. However, the new trading year has seen a sales boost, partly attributed to the Disney Ooshies promotion.
The New Zealand operation is valued at approximately $3 billion, with a return on employed funds increasing to 5.2 percent from 4.6 percent. Woolworths New Zealand remains a long-term investor in the Aotearoa retail sector, having injected $1.5 billion in capital into the New Zealand market over the past five years.
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