Woolworths Group Limited (ASX: WOW)

Continuous focus on customer experience - Woolworths Group is a Company engaged in retail operations whose focus is to generate sustainable sales momentum in food and to evolve its drinks business to provide even more value and convenience to customers. Its Drinks business, including Dan Murphy's and BWS, continues to innovate offers to provide the best value and convenience to customers, in-store and online. Further,Woolworths Rewards is Australia's most attractive supermarket loyalty program. As on date, retail sector is facing a lot of challenges and is experiencing huge changes in the ways it operates. This has made WOW also look for better alternatives and initiatives to beat the challenges.


Sales Performance of 3QFY18 (Source: Company Reports)

Lately, it was notified by BP Australia that BP will not continue with the proposed purchase of the Petrol business which was announced on 28 December 2016. Due to which the sale agreements, and strategic partnership agreements, entered with BP on 24 December 2016 will no longer be continued. The Group is actively engaging with the alternative options for its Petrol business. The Group’s sales performance remained strong in the third quarter of FY18. It was worth noting that despite the impact from the timing of New Year’s Day, the Australian and New Zealand Food’s Easter-adjusted comparable sales increased by 4.0 per cent and 3.8 per cent respectively for the third quarter of FY18. By the end of quarter, 1POS had been rolled out to 816 stores and 1Store remained on track to be rolled out to all Woolworths Supermarkets by the end of the financial year. BIG W’s sales increased by 3.2 per cent for 3QFY18 and amounted to $770 million with comparable sales increasing by 3.3 per cent.

Its focus has been to deliver consistently good shopping experiences across all stores and days of the week in FY18. Endeavour Drinks’ sales increased by 6.9 per cent in the third quarter to $2.0 billion with comparable sales increasing by 6.1 per cent. While New Zealand Food’s sales increased by 3.4 per cent for the quarter to NZ$1.6 billion with comparable sales increasing by 3.5 per cent. Petrol sales for the quarter of $1.2 billion were largely in line with the prior year. In Australian Food, it expected to begin to cycle the strong second half sales recovery in F17 and will continue to aim at delivering against the BIG W turnaround plan. ROE improved from 6.6 per cent in June 2017 to 9.2 per cent in December 2017 which is more than industry median of about 5.6 per cent. Meanwhile, the share prices have been rising since the start of the year and were up by 9.63 per cent and by 3.63 per cent in last one month. We give a “Hold” recommendation at the current market price of $29.96 by looking at the current retail landscape and the Company’s recent sales performance.

 
Disclaimer
 
The advice given by Kalkine Pty Ltd and provided on this website is general information only and it does not take into account your investment objectives, financial situation or needs. You should therefore consider whether the advice is appropriate to your investment objectives, financial situation and needs before acting upon it. You should seek advice from a financial adviser, stockbroker or other professional (including taxation and legal advice) as necessary before acting on any advice. Not all investments are appropriate for all people. Kalkine.com.au and associated pages are published by Kalkine Pty Ltd ABN 34 154 808 312 (Australian Financial Services License Number 425376). The information on this website has been prepared from a wide variety of sources, which Kalkine Pty Ltd, to the best of its knowledge and belief, considers accurate. You should make your own enquiries about any investments and we strongly suggest you seek advice before acting upon any recommendation. Kalkine Pty Ltd has made every effort to ensure the reliability of information contained in its newsletters and websites. All information represents our views at the date of publication and may change without notice. To the extent permitted by law, Kalkine Pty Ltd excludes all liability for any loss or damage arising from the use of this website and any information published (including any indirect or consequential loss, any data loss or data corruption). If the law prohibits this exclusion, Kalkine Pty Ltd hereby limits its liability, to the extent permitted by law to the resupply of services. There may be a product disclosure statement or other offer document for the securities and financial products we write about in Kalkine Reports. You should obtain a copy of the product disclosure statement or offer document before making any decision about whether to acquire the security or product. The link to our Terms & Conditions has been provided please go through them and also have a read of the Financial Services Guide. On the date of publishing this report (mentioned on the website), employees and/or associates of Kalkine Pty Ltd do not hold positions in any of the stocks covered on the website. These stocks can change any time and readers of the reports should not consider these stocks as advice or recommendations.