Woolworths delivers a mixed bag as Big W headaches offset grocery revival

WOOLWORTHS has climbed out of the red to post a $1.53 billion full-year profit, although losses at its struggling discount chain Big W are blowing out.

Woolworths chief Brad Banducci at the group’s Metro store in Sydney.

WOOLWORTHS has climbed out of the red to post a $1.53 billion full-year profit, although losses at its struggling discount chain Big W are blowing out.

Woolworths has bounced back from last year’s historic $1.23 billion loss when its bottom line was hit by writedowns associated with its failed Masters hardware experiment, it annouced this morning.

Underlying profit from continuing operations — a measure which strips out one-offs and businesses the group has exited — declined by 3.6 per cent to $1.42bn for the year ending June 25.

Sales in its core supermarket sales rose 4.5 per cent to $36.4 billion but underlying earnings slipped 2.4 per cent to $1.6 billion as Woolworths gave up profit to invest in lowering prices and improving service.

Underlying earnings returned to growth in the second half of the year and the closely watched like-for-like sales, which strips out the impact of store openings and closures, hit 6.4 per cent in the three months to June.

The result easily beat key rival Coles but Woolworths warned it did not expect such strong growth to continue at the same rate.

Losses at Big W blew out from $14.9 million to $150.5 million and Woolworths warned it did not expect the bottom line to improve this financial year.

Shares in the supermarket giant were up 2.1 per cent at $27.62 in early trade on Wednesday.