Shares of Woolworth Group dropped 4.9 cents to $34.24, resulting the retail company to post the most terrible quarterly growth figures in five years. The group’s core area of operation is supermarkets. Slowdown in that sector has disappointed the group.
Grant O’Brien, the chief of Woolworth group said “We didn’t deliver a consistency of growth that we have been able to do in recent times and I’ve challenged our team to deliver that moving forward.” Food and liquor sales in Australia surged 3.9 percent to $11 billion. The stores performed poorly in the months of August and September.
Weaker than anticipated sales is not the sole reason behind Woolie’s slumping stock value. Declining volume of petrol has its own share to contribute to the falling sales of BIG W. The company’s sales fell for the eighth quarter. Its revenues at Masters stores open also fell.
Company representatives however, are trying their best to sound optimistic. They said they have trading plans for backup and in the second quarter (The Christmas period) they will make a staggering sale. Woolworth has launched a campaign called “Cheap Cheap” in September. However the marketing to reach out to shoppers wasn’t adequate. The supermarket failed to properly market its price offers to customers.
The situation is not entirely bleak for Woolworth. At the Wesfarmers-owned supermarket, the Like-for-like sales rose 4.4 percent. The Masters hardware chain has 49 stores. It performed exceedingly well. Sales surged 30.8 percent to $238 million. Observing the trend, an analyst called Craig Woolford said “Woolworths’ price-earnings ratio is typically linked to like-for-like store sales trends and the first quarter result will put pressure on the stock.”
Another analyst called Michael Simotas said the slump in the fourth quarter was initially considered a short term anomaly but prolonged deterioration points at the continued slowdown in the group’s core food and liquor segment. The segment is slowing down on absolute basis and also relative to the main competitors.
Woolworth at this moment isn’t giving importance to the insinuation of the slowdown. The company hopes to see pompous sales in Christmas. Analysts are also looking at that. Mr. Woolford said “the magnitude of the company’s response will have important ramifications for Christmas trade across the retail industry.”