WOOLWORTHS boss Michael Luscombe claims the supermarket giant's half-year results are the latest in an unbroken chain of earnings improvements that show it is peeling away customers from the independents, newcomers Aldi and Costco and a revitalised Coles.
He said Woolworths had grown faster than the market and its competitors, ringing up 40 per cent more sales dollars than its arch rival Coles and at twice the profit rate.
''Which business would you rather own, because you don't take percentages to the bank, you take dollars to the bank, and that's what you use to reward your shareholders, to give a return on your investment and also to reinvest in the future. That's what its all about.
''The gap between us, both in terms of sales and profitability, actually grew.''
Woolworths shareholders will indeed be rewarded following a strong performance in the first half, with the interim dividend pushed more than 10 per cent higher to 53¢ per share and investors also treated to a surprise $400 million on-market share buy-back.
Woolworths yesterday said its half-year profit rose 11.4 per cent to $1.096 billion, as sales (excluding petrol) increased 6 per cent to $27.2 billion.
Its flagship supermarkets division was once again the driving force of the result, with even its struggling New Zealand operations finally benefiting from internal improvements and cost-cutting to increase pre-tax earnings by 24.3 per cent for the half.
The Australian supermarkets business had an 11.4 per cent rise in earnings before interest and tax (EBIT) to $1.35 billion. Comparable sales increased 4.8 per cent, against 6.6 per cent in the first half of 2008-09.
Last week, Wesfarmers reported that Coles, now deep into a five-year turnaround strategy, had EBIT of $486 million for the half, up 12.8 per cent, as comparable store sales growth was 6 per cent.
''We are growing customer numbers per store not losing them,'' Mr Luscombe said.
The half-year result was in line with most analyst expectations. All divisions recorded EBIT gains except the hotels division. Its Indian electronics joint venture turned profitable for the first time.
''A solid result and a bit better than the market would have anticipated following the disappointing sales update in late January,'' said Deutsche Bank retail analyst Alexi Baker.
''Strong performance from New Zealand supermarkets and consumer electronics. Generally, gross margins were better than expected across the group.''
Big W increased sales by 2.3 per cent to $2.46 billion and EBIT rose 6 per cent to $150.8 million.
Mr Luscombe said it was a strong result given the economic challenges of cycling the prior year stimulus package and the decline in food inflation.
Shares in Woolworths ended $1.39 higher, or 5.5 per cent, at $26.84.
Email a friend