By Andrew Starke
Woolworths has reported a six percent rise in net profit for the first half of the financial year with the retailer’s liquor and hotel operations reflecting the lower growth figures of the overall operation.
The Australian Food and Liquor sector reported sales increasing by $629 million or 3.5 percent, down from an increase of 6.8 percent for the first half of FY 2010.
The company said the 27 weeks to January 2 this year had seen very different trading conditions compared to the same period in the prior year with tightened consumer spending, increased interest rates and higher utility prices.
In a statement to the Australian Stock Exchange (ASX), Woolworths said Dan Murphy’s, BWS and Woolworths Liquor all continued to perform well with sound growth in sales, profits and market share despite these challenging market conditions, including low inflation.
Group liquor sales (including ALH Group liquor sales) for the first half totalled $3.2 billion (HY10: $3.1 billion).
“The liquor distribution network is maturing ahead of expectation and has resulted in lower store inventory levels and higher in stock positions,” said the statement.
Woolworth’s liquor continued to expand its range of exclusive brands with Sail & Anchor Clipper light beer and Castaway cider, which are both manufactured by Gage Road Breweries (in which it holds a 25 percent stake), both launched over the first half.
Dan Murphy’s opened 12 stores in the half year bringing the total number of Dan Murphy’s stores to 133.
A further eight stores are planned to be opened in the second half.
At the end of December 2010, Woolworths Limited operated 1,249 liquor retail outlets.
The company said that, relative to the broader hotel sector, performance or its hotel business continued to prove resilient.
During the first half reporting period its 50th Dan Murphy’s store on a Hotel site was opened, while sales in the hotel business increased 3.6 percent to $612 million and comparable sales increased by 3.4 percent.
A further two properties were added in the half, taking the total number of hotels and clubs to 284 and a total of 1,359 accommodation rooms.
Distribution was further fortified.
“The liquor distribution network has been further developed by the successful commissioning of the Brisbane Liquor DC in the last quarter of FY10 which complements the Melbourne and Sydney Liquor DCs, commissioned in the previous financial year,” said a company statement.
“The network is now well positioned to support continued growth of our liquor business.”
Shares in Woolworths Limited were trading a $26.87 at 11am today (Feb 28), slightly up from $26.83 seven days ago.