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Woolworths Group Limited Report FY19 Results

Jordan Baird

Jordan Baird is the head ASR Wealth Advisers client services desk and has been with the organisation since 2017. He first started investing in his early years. While he believes that investors should leave no stone unturned he has a particular interest in trading based on broad macroeconomic trends along with specific analysis of innovative up-and-coming companies.

Woolworths Group Limited (ASX: WOW) is a retailer that operates a range of brands servicing 29 million customers weekly, these include supermarkets, department stores, liquor and fuel stores.

Woolworths Group - Report FY19 Results

What are the FY19 results for WOW?

This morning (29th August 2019) Woolworths Group Limited released their FY19 report that is detailed below:

  • Net Profit After Tax (NPAT) of $1,752m up 7.2%.
  • Sales revenue of $59,984m up 3.4%.
  • Earnings Before Interest and Tax (EBIT) of $2,724m up 5%.
  • Total FY19 dividend distribution of 102 cents per share.

Segment specific results for WOW:

  • Australian food sales revenue of $39,568m up 3.3% with the introduction of 24 new stores.
  • Endeavor Drinks EBITDA down 5.4% to $579m.
  • Big W Loss Before Interest and Tax before significant items increased by 24% to -$85m.

What are the key drivers of this result?

Australian food retail services remain Woolworths key revenue source however the Company has diversified considerably in recent years generating additional revenue and costs for WOW. The strong performance of the food sector has been driven by continued store renewal and growth, investment in the Woolworths homebrand and a 30% growth in online sales. The Company has also seen growth in its rewards membership, with 11.7m members in FY19 and has received No.1 awards for customer satisfaction. Endeavor Drinks that operates two of WOW’s key brands, BWS and Dan Murphy’s saw an increase in sales volumes of 3.2% as margins decreased and costs increased reducing net earnings. Both BWS and Dan Murphy’s have established on demand delivery stores that have supported double digit online sales growth, both brands also opened new stores in FY19, 30 for BWS and three for Dan Murphy’s.

What is the future outlook for WOW?

Woolworths is expecting Australian food sales to continue to grow as the Company attempts to increases its sales of fresh produce as well as increasing online sales volumes. WOW is also looking at reducing Big W’s continued losses by closing unprofitable stores, whilst Endeavor Drinks will continue to utilise online platforms to deliver liquor products to customers in new and unique methods.

How has the market reacted?

The market has responded negatively with the share price falling 1.02% to a price of $35.81 as investors are concerned with the losses reported by Big W and decline in earnings of Endeavor Drinks.

 


 

Disclaimer:

This article has been prepared by the Australian Stock Report Pty Ltd (AFSL: 301 682. ABN: 94 106 863 978)

(“ASR”). ASR is part of Amalgamated Australian Investment Group Limited (AAIG) (ABN: 81 140 208 288 Level 13, 130 Pitt Street, Sydney NSW 2000).

This article is provided for informational purpose only and does not purport to contain all matters relevant to any particular investment or financial instrument. Any market commentary in this communication is not intended to constitute “research” as defined by applicable regulations. Whilst information published on or accessed via this website is believed to be reliable, as far as permitted by law we make no representations as to its ongoing availability, accuracy or completeness. Any quotes or prices used herein are current at the time of preparation. This document and its contents are proprietary information and products of our firm and may not be reproduced or otherwise disseminated in whole or in part without our written consent unless required to by judicial or administrative proceeding. The ultimate decision to proceed with any transaction rests solely with you. We are not acting as your advisor in relation to any information contained herein. Any projections are estimates only and may not be realised in the future.

ASR has no position in any of the stocks mentioned.

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