Woolworths to cut 400 jobs

THE supermarket giant is going to cut hundreds of jobs in an effort to stop itself from losing even more ground to Coles.

An employee stocks shelves at a Woolworths Ltd. supermarket in Melbourne, Australia, on Wednesday, Jan. 27, 2010. Woolworths Ltd., Australia's biggest retailer, said second-quarter sales rose 4 percent on Christmas demand at its supermarket and discount department stores. Photographer: Luis Enrique Ascui/Bloomberg

WOOLWORTHS will cut 400 jobs in an effort to stop itself from losing even more ground to Coles.

Woolworths chief executive Grant O’Brien told investors on Wednesday that the company has already axed about 400 full-time positions from its back office operations.

Now a further 400 positions will be cut as the retailer accelerates its ‘Lean Retail’ model designed to save $500 million in costs during the 2015/16 financial year.

“We will reduce further non-customer facing roles by a further 400 positions by the end of the first half of FY16 as we continue to identify process improvements,” Mr O’Brien said on Wednesday.

The news comes as the supermarket giant lags further behind its rival Coles, with total food and liquor sales up just 2.3 per cent during the third quarter.

Woolworths’ supermarkets sold $10.6 billion worth of goods during the 13 weeks to April 5, with same store sales climbing 0.7 per cent during the period.

By comparison, Coles increased its food and liquor sales 5.4 per cent during the quarter, with comparable sales up 3.8 per cent. The sales result is a slowdown compared to the first half of the financial year, when Woolworths lifted total food and liquor sales 3.4 per cent and comparable sales 1.7 per cent.

Woolworths’ total sales fell 1.6 per cent to $14.96 billion during the quarter, weighed down by weakness at its Big W chain and lower petrol sales following the slide in oil prices and changes to its alliance with Caltex.

And the results look more disappointing after adjusting for the timing of Easter this year, with comparable food and liquor sales up just 0.2 per cent and total group sales down 2.1 per cent. Sales from Big W were down 5.7 per cent, after adjusting for Easter, to $907 million for the quarter, while petrol sales slumped 35 per cent to $1.18 billion.

Woolworths disappointed investors in February when it warned its profit growth for the year would be weaker than previously expected.

The company said at the time it expected its full year profit increase to be towards the lower end of the 1.8 per cent to 6.6 per range forecast by analysts.

Chief executive Grant O’Brien on Wednesday said sales had improved in February and March as it stepped up investment in its supermarket business, though April had been weaker.

“At the half year 2015 results, we informed the market that Australian Food and Liquor sales in December and January were disappointing,” he said.

“While February and March showed some improvement as we commenced the actions announced in February, April was more subdued and there is still much to do.”