Woolworths not amused by entertainment sales slump
Like-for-likes fall as consumer downturn continues
Woolworths has continued to see like-for-like sales decline amidst tough conditions on the high street, with a lack of high profile entertainment releases exacerbating the problem.
In a statement to the retailer’s annual meeting, shareholders were told that across the 18 weeks to June 4, like-for-like sales in the Woolworths Mainchain decreased by 4.4 per cent.
Excluding entertainment – including music, video, games and books – like-for-like sales decreased by 0.3 per cent. Chairman Gerald Corbett said entertainment suffered a “comparatively poor release schedule”, and overall, “current trading has remained difficult and the outlook for consumer spending on the high street remains poor.”
Action has been taken to reduce costs in order to limit the impact of negative sales and margin, and space allocation in stores has been changed to focus on the most profitable product.
Refurbished stores continue to outperfrom the overall business, and eleven stores converted this year are achieving sales targets. Fifty stores in total will be revamped to the new 10/10 format this year.
The Entertainment UK distribution arm has seen third party sales increase by 8.7 per cent across the 18 weeks, with a deal agreed to supply Morrisons with music, video and games.
[img r]BigWbeckton.jpg[/img]Woolworths chairman Gerald Corbett said further progress has been made with the disposal programme of the former Woolworths big W out-of-town retail sites while the process of selling MVC “is well underway”. Specialist retailer Music Zone is understood to be the front runner.
Corbett said that following the end of takeover discussions with private equity firm Apax in April, a review of capital structure and financing has taken place. There is “no current intention to return cash to shareholders” other than through dividends, since “the group needs to maintain the financial capability to fund the seasonal build up in working capital ahead of the peak Christmas period.
Corbett said: “We anticipate that the retail environment will continue to be challenging, and against that background, the board’s focus will remain on controlling costs and stock, generating cash and taking action to improve the group’s businesses.”
