Christmas disappoints at Woolworths
Flat sales across December after tough year for retail
Woolworths has reported flat like-for-like sales in its core high street Woolworths Mainchain stores across December, confirming a tough environment in the all-important festive sales period after a like-for-like decline across the year.
Woolworths said flat like-for-likes in the four weeks to January 1 followed a weak November in which sales of entertainment products and toys were disappointing. The well publicised PlayStation 2 shortage as well as a lack of high profile DVD releases hit entertainment sales, while the toy market was ‘difficult’, with toy sales in the Mainchain not justifying the increased space given to the category.
Woolworths’ other retail chains also suffered across the four weeks, with Woolworths Big W like-for-likes down 8 per cent and MVC by 4.7 per cent. Big W has seen a reduction in non-core categories in preparation for the sale or downsizing of sites, while MVC was hit by increased competition.
[img r]mvc.jpg[/img]Across the 48 weeks to January 1, total group sales, including share of joint ventures, rose by 2.9 per cent, with the Entertainment Wholesale and Publishing businesses up by 31.6 per cent and retail down by 3.3 per cent. Like-for-like sales in the Mainchain were down by 1.5 per cent, Woolworths Big W down by 4.1 per cent and MVC down by 5.3 per cent.
Woolworths said gross margin for the combined Mainchain and Woolworths Big W businesses has continued to improve and despite the weak retail sales, it has maintained a tight control over costs and stock.
At the 58 refurbished stores in the 10/10 stores, sales and margins continue to perform ahead of the rest of the Mainchain. Contracts have aso been exchanged for the complete disposal of seven Big W sites. Two further Big W stores were cut down in October, and there has been interest from other retailers in renting the additional space.
The Entertainment UK wholesale business performed well over the Christmas period and 2entertain, the joint venture with BBC Worldwide, saw a particularly strong Christmas thanks to demand for DVD titles such as Little Britain-Complete First Series’.
Woolworths said group profit for the year is expected to be similar to last year. Trevor Bish-Jones, Chief Executive said: ” Although we are disappointed with the sales performance in our Retail business, we have made good progress on improving the gross margin and remain confident about the potential of Woolworths and our Entertainment businesses.
“Woolworths has responded well to investment in systems and stores, which has resulted in a better store environment, an improved product offering and has made us significantly stronger operationally. Using our strong positive cash flow we are confident that continued investment in our stores will underpin future growth.”
