WOW FY14 Half Year Profit Analyst Presentation
Transcript of WOW FY14 Half Year Profit Analyst Presentation
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COMPANY
RESULTSHALF YEAR ENDED
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TjeerdJegen
PRESENTATION OUTLINE
GrantO'Brien
BradBanducci
DaveChambers
KarenBozic
MattTyson
DavidMarr
GrantO'Brien
Presenter
AustralianSupermarketsandPetrol
GroupPerformanceandStrategicPriorities
WoolworthsLiquorGroup
NewZealandSupermarkets
GeneralMerchandise
HomeImprovement
GroupFinancialPerformance
Outlook
Item
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Results half year 2014
TotalGroup ContinuingOperations
BeforeSignificantItems1
Sales $31.8b 3.8% $31.8b 6.0%
EBIT $2,048.0m 11.3% $2,048.0m 5.9%
NPAT $1,321.7m 14.5% $1,321.7m 6.0%
EPS 106.1 13.4% 106.1 4.9%
DPS 65 4.8%
ROFE 14.9% 87bps2
1.TherewerenosignificantitemsinHY14.SignificantitemsinHY13included
OneofflossontheSCAPropertyGrouptransactionof$32.8m(beforetax)and$28.5m(aftertax)
NetlossondisposalofConsumerElectronicsbusinessesof$63.7m(beforetax)and$65.7m(aftertax)
2.ExcludingtheimpactofdifferencesinthetimingofcreditorpaymentsrelativetothereportingdatesandthecontinuinginvestmentinourHomeImprovementbusiness,ROFEincreased33bps
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$million HY13 HY14 Change
AustralianFoodandLiquor 1,583.9 1,692.1 6.8%
Petrol 71.0 74.0 4.2%
AustralianFood,LiquorandPetrol 1,654.9 1,766.1 6.7%
NewZealandSupermarkets(NZD) 162.3 164.4 1.3%NewZealandSupermarkets 124.7 136.8 9.7%
GeneralMerchandise 129.5 120.5 (6.9)%
Hotels 140.8 163.9 16.4%
Masters (69.1) (71.9) 4.1%
HomeTimberandHardware 10.6 7.5 (29.2)%
HomeImprovement (58.5) (64.4) 10.1%
CentralOverheads (56.7) (74.9) 32.1%
GroupEBIT ContinuingOperations 1,934.7 2,048.0 5.9%
ConsumerElectronics Australia,NewZealandandIndia 2.5 n.c2
GroupEBIT DiscontinuedOperations 2.5 n.c2
TotalGroupEBIT(beforesignificantitems) 1,937.2 2,048.0 5.7%
SignificantItems(beforetax)
OneofflossonSCAPropertyGrouptransaction (32.8) n.c
NetlossondisposalofConsumerElectronicsbusinesses (63.7)1 n.c
TotalGroupEBIT(aftersignificantitems) 1,840.7 2,048.0 11.3%
Group EBIT from continuing operations before
significant items up 5.9%
1.AfterreflectingadditionalsaleproceedsinthesecondhalfofFY13,thenetgainondisposaloftheConsumerElectronicsbusinessesinFY13was$9.9m(beforetax)
2.NotcomparablegiventhesaleofthesebusinessesduringHY13
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Extend leadership in
Food and Liquor
Act on our portfolio to
maximise shareholder value
Maintain our track record ofbuilding new growth businesses
Put in place the enablers
for a new era of growth
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Extend Leadership in Food and Liquor
NewrangeoffreshfoodinitiativestoemphasiseourFreshleadership Embedourpriceleadershipthroughthe'MoreSavingsEveryDayvehicle Maximiseouruseofdatatoattractandrewardcustomers ExtendourleadershipinmultioptionFoodandLiquorthroughinnovationandstandoutexecution ContinuetoreducepricesinNewZealandforthebenefitofourcustomers
Improvingcomparablesales
performance
and
EBITgrowthIncreasedmarket
shareunderpinnedbystrongvolume,customernumbersandspacegrowth
Weattracted
3.9%
morecustomersthantheprioryear,servingonaverage21mcustomersperweek
Momentum inFood and Liquor
Improvedcommunication
of
our
valuecredentialsMoreSavingsEvery
Daydeliveredsavingstocustomersofover$400m
Reinforcingprice
leadershipamong
full
rangesupermarketsAveragepricedeflation
of4.1%forthehalfyear
Unbeatable Value
Freshmarketsharegrowing
faster
than
Grocery NewJamieOliver
partnershipfocusingonaffordablefreshfood
Stronggrowthin
organicand
free
range
meatandpoultry
FIRST CHOICEFOR FRESH FOOD
Increasedaccesstoour
market
leading
bricks&mortarofferDeliveredbest
practiceportfolioofsegmentedonlineoffers
Pinnacledelivering
highquality,
exclusive
productranges
LeadingLiquor Destination,In-store and Online
Earlystagesoftransforming
our
Countdownbusiness Q2resultthestrongest
comparablesalesgrowthrecordedin18months
Underpinnedby
successfulpromotions,
strongFreshgrowth,newoffersandOnline
IMPROVINGNew Zealand
Comparable SalesGrowth
Well Underway
More To Do
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Act on our portfolio to maximise shareholder value
Industryleadinghotelandgaming
charter
reinforcing
our
commitment
toresponsibleserviceofgamingandliquor
Commencementofgamingmachinevoluntaryprecommitmentfunctionalityrollout
Maximisingperformanceofthe
hotelsacquired
through
the
Laundy
transaction
Australia's Best andMost Responsible Hotels
Commencedthetransformationof
our
customer
offer Reprioritisingcategoriesofgreatest
importancetocustomers,impactingsalesandprofitintheshorttermbutdeliveringprofitablegrowthoverthemediumtolongterm
Enhancingreplenishmentsystems
andsupply
chain
capabilities
AmbitiontobecomeAustralasia'sleadingmultioptiondiscretionaryretailer
BIG WBUSINESS TRANSFORMATION
ENHANCING OUR PETROL OFFER
Expandingavailabilityofdiesel,
premium
fuels
and
fast
flow
pumps Maximisingourmerchandiseoffer
(nonfuel)throughnewandexpandedranges
GeneralMerchandise RolloutnextwaveofspaceandlayoutreconfigurationacrosstheBIGWstorenetwork Developandimplementnewsupplychainandreplenishmentsystemstotransformourspeedandefficiencytomarket LeverageEziBuytodrivemultioptionambitionsHotels
Furtherdevelopment
of
our
bar,
food
and
entertainment
offer
Implementvoluntaryprecommitmentfunctionalitypriortolegislativerequirements FurthertargetedhotelacquisitionstoprovideapipelineforDanMurphysandBWSstoreopenings
More To Do
Well Underway
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Maintain our track record of building newgrowth businesses
38Mastersstorestradingattheendofthehalf
Ontrack
to
have
49
stores
trading
by
year
end
RefreshedHomeTimberandHardwarecompanystoresdeliveringpleasingsalesgrowth
HomeTimberandHardwarewasrecentlyawardedHardwareStoreoftheYearattheRoyMorganCustomerSatisfactionAwards
MattTysonappointedasManagingDirector,HomeImprovement
bringing
extensive
international
and
businessdevelopmentexperience
Australia's FASTEST GROWINGHome Improvement offer
Onlinesalesexceeded$1bforthe2013calendaryear,
aheadof
our
FY14
target
MarketleadingonlinefoodoffersinAustraliaandNewZealand
Onlinesalesfromcontinuingoperationsincreasedby40%duringthehalf
Liquoristhemostdevelopedexampleofourmultioptionambitions
Transactionalmobile
sites
in
place
for
all
of
our
brands
Growing our Leadership asAustralasia's Largest Domestic Online Retailer
Platformandoperationalenhancementstodriveanincreaseinonlinetraffic CompletingrapidrolloutofClick&Collectinalldivisions Continueourconsiderationofdomesticandinternationalgrowthopportunities DriveLearnandImproveapproachinMastersstores ContinuerecruitmentofimportantHomeTimberandHardwarecustomers
More To Do
Well Underway
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Detailedplanninghas
commencedfor
our
next
generationsupplychain
capability
Newsystemsandprocesses
maximisingonshelf
availabilitywhilstoptimising
stocklevels
BUILDING ON OURWORLD CLASS SUPPLY CHAIN
Deliveringonourcostout
ambitionsacross
our
businesses
OurpermanentOperations
Developmentteamcontinue
todrivebenefitsin
Supermarkets,whichare
thenleveragedacrossthe
restof
the
Group
DRIVINGEFFICIENCIES IN STORES
EverydayRewardsloyalty
membership
up
to
7.5m
and
Onecardmembersupto
1.8m
WeareleveragingQuantium
tobetterunderstandour
customersneedsin
Pricingandpromotion
Ranging Storelayout
Weareworkingcloselywithsupplierstodevelopjoint
longtermcategoryplansusinginsights
CUSTOMER INSIGHTSTRANSFORMING OUR BUSINESS
Continuedfocusonblending
the
best
local
and
internationaltalentatalllevels
oftheorganisation
Wehavemadeanumberof
seniorappointmentsacross
thebusinessincluding
MattTyson,MDHome
Improvement CliveWhincup,CIO JamesAylen,GMHome
TimberandHardware
MartynRoberts,GMPetrol
ASSEMBLING AWORLD CLASS RETAIL TEAM
Put in place the enablers for a new era of growth
Movetoanewphaseofbusinesstransformationthroughourendtoendsupplychainandreplenishmentprojects
Continuetoleveragecustomerdatatodrivesalesgrowthandloyaltyacrossthebusiness
Productivityimprovementprogramstocontinuerelentlessfocusoncosts
Continuetomakenewappointmentstocomplementourteam,sourcedinternally,domesticallyandinternationallyasappropriate
More To Do
Well Underway
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AUSTRALIAN SupermarketsTjeerd JegenManaging Director Australian Supermarkets & Petrol
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HY13 HY14 Change
Sales Food&Liquor($m) 20,488 21,477 4.8%
Petrol($m) 3,393 3,665 8.0%
Total($m) 23,881 25,142 5.3%
EBIT Food&Liquor($m) 1,583.9 1,692.1 6.8%
Petrol($m) 71.0 74.0 4.2%
Total($m) 1,654.9 1,766.1 6.7%
FundsEmployed($m) 4,122.0 4,312.8 4.6%
Grossmargin
(%) 25.14 25.17 3
bps
CODB(%) 18.21 18.15 (6)bps
EBITtosales(%) 6.93 7.02 9bps
ROFE(%) 40.65 40.89 24bps
Australian Food, Liquor & Petrol
Food&LiquorHY14comparablesalesgrowthwas3.0%withincreasedmomentuminQ2deliveringcomparablesalesgrowthof3.4%
SuccessfulChristmastradingperioddrivenbyour
leading
positions
in
price
and
range
Increasesinmarketshare,customernumbers,basketsize,itemssoldandsalespersquaremetre
Continuedtodeliverexceptionalvalue withaveragepricedeflationof4.1%forthehalfyear(includingtheeffectsofpromotionsandvolumes)
Grossmargin increase
reflects
improvements
in
buying,moreeffectivepromotionsandgrowthinourexclusivebrands,includingLiquor.Muchofthebenefitfromtheseinitiativeswasreinvestedintoprice
Food&
Liquor
(excluding
Petrol)
CODB
%
was
flat
agoodresultgiventhelargenumberofnewstoresyettoreachmaturetradinglevelsandongoinginvestmentinourmultioptionbusiness
23AustralianSupermarkets(net)openedduring
the
half
year,
bringing
the
total
to
920,
employing
anadditional2,000people.13refurbishmentscompleted
Increasing momentum in sales and profit
Trading Performance
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Progress against objectives
1.Firstchoiceforfreshfood
ContinuedtoimprovethequalityofourFreshoffer,withenhancementstooursupplychain
Inlinewithourstrategytobefirstchoiceforfreshfood,ourFreshmarketshareisgrowingfasterthanGrocery
JamieOliverpartnershipfocusingon
affordablefresh
food
and
encouraging
a
healthierAustralia
Sushibarsandbakeriesrolloutcontinuedwithafurther40sushibarsand49bakeriesaddedtoourstorenetwork.Wenowhave
bakeriesin
86%
of
our
stores
Customerscontinuetoaskformoreorganicandfreerangemeatandpoultry,leadingtostronggrowthinthesecategories
Extending our Fresh food leadership
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Progress against objectivesReinforcing our price leadership
2.Unbeatablevalue
Improvedthecommunicationofour
value
credentials
through
'More
SavingsEveryDay'
Asourkeyvalueplatform,'MoreSavingsEveryDay'deliveredsavingsof$400m+tocustomersoverthehalf,
through3
clear
and
simple
ways
Reinforcedourpriceleadershipamongfullrangesupermarketswithdeflationinaveragepricesof4.1%forthehalf
Ourdrive
to
offer
affordable
fresh
food
continuedwithfurtherpricereductionsinmeat
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Progress against objectivesCustomer insights at the heart of our planning
3. Customerinsightstransformingourbusiness
Increasein
Everyday
Rewards
members
to7.5m(up11%onHY13)withstronggrowthincardscanrates
TogetherwithQuantium,weareworkingcloselywithsuppliersto
leverageour
Everyday
Rewards
data
to
deliverinsightsandbetterdecisionsacrosspricing,ranging,promotionsandstorelayout
Wearesendinganaverageof2.2memails
and
direct
mails
to
customers
eachweekwithtargetedSupermarketoffers
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Progress against objectivesComplementing our existing core offer across the store
4.Innovativenewoffers
Apermanent'Gold'rangenowlaunchedsettinganewhighstandardforownbrand
productsin
quality,
innovation
and
taste
Rolloutofnewinstoreoffersincluding
HealthyLunchbox(104stores)
FoodtoGosandwichesandsalads
(127
stores) Freshbaristacoffee(nowin11stores)
Bulkfoods(5stores)
Successfultrialof'FarmersOwn'milkproducedintheManningValley(NSW)willbe
extended
to
105
stores
AnnouncednewownbrandAustraliansourcingdealswithSPCArdmonaforSelectcanneddeciduousfruitandSimplotforSelectfrozenvegetables
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Progress against objectives
5.Multioptionofferingcustomersmoreflexibility
Thenumber
of
unique
visitors
to
our
online
sitehasmorethandoubledduringthehalf
Wedeliver3m+itemstocustomerseachweek,withhomedeliverynowavailabletomorethan95%ofAustralianhouseholds
ExpandedClick&Collectnetworkto188storesatHY14,including15drivethrus,nowofferingsamedaycollectionservice
Targetedandpersonalisedoffersimproved
customer
conversion
and
shopping
frequency
Growing our leadership position in online
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PetrolExpanded network and convenience offer
Salesincreasedby8.0%drivenbyhigheraveragefuelsellpricesandpleasinggrowthinmerchandisesales
Competitoractivityfocusedonincreased
fueldiscounts
which
impacted
our
fuel
volumes
EBITincreased4.2%to$74.0mthrough
Thecontinuingshifttowardspremiumunleadedanddieselfuels
Strongermerchandisesales
CODBasapercentageofsalesdecreasedontheprioryeardespitecostsassociatedwithnewpetrolcanopies
$3.7BSales
8.0%
Merchandise Sales
9.8
Trading Performance
$74.0EBIT
M 4.2%
0.6%FUEL Volumes
or
%
or
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Progress against objectives
1.Providecustomerswithacompellingfueloffer
Continuedinvestmentinforecourtimprovements,providingcustomerswithbetteraccesstodiesel,premiumfuelsandfastflowpumps
Duringthe
half,
signage
at
32
sites
were
rebrandedand52canopiesandforecourtsrefreshed
2. Acceleratemerchandisesales
Newcategoriesandproductsareaddingincrementalsalesaspartofourstrongfocusonimprovingourconvenienceoffer
3.
Increaseour
network
profile
Opened14(net)sitesduringHY14
TotalCaltex/Woolworthsnetwork627,including496Woolworthsownedsites
Plan
to
open
a
further
5
sites
(net)
in
FY14
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Woolworths Liquor GroupBrad Banducci
Director of Liquor
Woolworths Liquor group sales
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Woolworths Liquor group salesLeading liquor retailer in Australia
$billion
3.8
3.6
3.2
3.1
4.0HY14
HY13
HY12
HY11
HY10
Comments
Strongresultforthehalfyear
withgoodsalesgrowthacross
allthree
channels
Dan
Murphys(Destination),BWS
(Convenience)andTheWine
Quarter(Online)highlighting
therelevanceofeachofour
offerings
GrowthintheWinecategory
wasakeyhighlightforthe
halfyear
Note:includesALHGrouponpremiseliquorsales
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Woolworths Liquor group
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Woolworths Liquor group
Online/Click
&
Collect Bricks
&
Mortar
Connoisseur
Convenience
andValue
Bargain
Hunter
OffPremise OnPremise
A unique business model
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Progress against objectives
1.ContinuetoevolveDanMurphys
Australiaspremier
liquor
destination
continues
to
grow,
opening6storesinHY14,withtotalstoresnow181
Extendedourmultioptionleadershipthrough
LaunchofAustralia'sfavouriteliquorApp,withphotorecognitiontechnology
ExtradeliveryoptionsSameDay,NextDayandPickaDaydelivery
FirstmajorAustralianretailertolaunchClick&Collectnationwide,withsalesmorethandoublinginQ2
Introduceda
new
store
operating
model
with
more
customerfacingstaff
2.DeveloptheBWSbrandandconvenienceoffer
RebrandingofWoolworthsLiquortoBWSinFY13
createdAustralias
most
accessible
liquor
brand,
now
with1,200stores
ContinuedtostrengthenthebrandwithsponsorshipofTheAshesandSummerofCricketandthelaunchof'Today'sSpecial'brandmarketingcampaign
Continuedprogress
in
tailoring
our
ranges
around
shopperoccasions
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Progress against objectives
3.IncreaseownandexclusivebrandpenetrationthroughPinnacleLiquor
PinnacleLiquorcontinuestogrowasourownand
exclusiveproduct
and
brand
marketing
arm
Newandinnovativeproductslaunchedduringthehalfwithapleasingcustomerresponse
4.LeadershipinDigitalandDirectviaTheWineQuarter
Establishedadigitalanddirectbusinesscentreofexcellence,employingapproximately650people,leveragingCellarmastersdirectmarketingcapabilities
Langton'scontinuestodeliverstrongsalesgrowth,reinforcingitspositionasAustralia'sleadingultrafinewinebusiness
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Hotels
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HY 3 HY 4 ChangeSales ($m) 759 788 3.8%
EBIT($m) 140.8 163.9 16.4%
Grossmargin(%) 82.29 82.75 46bps
CODB(%) 63.74 61.95 (179)bps
EBITtosales(%) 18.55 20.80 225bps
Hotels
Tradingconditionsareachallengeatpresent,especiallyinBarsandGaming.OurFoodofferremainsafocusandweareseeingsolidresultsasweconcentrateon
providingvalue
meals
in
a
family
friendly
setting
GrossmarginincreasewasassistedbytheVictoriangamingregulatorychangeswhichcycledinAugust
CODBdecreaseattributabletostrategicinitiativestoimproveefficiencyinvenuesandthecyclingofbusinessacquisitioncostsintheprioryear
EBIT
increased
16.4%
on
the
previous
half
yearto$163.9m
PleasingresultsfromthehotelsacquiredaspartoftheLaundytransactionintheprioryear
A key enabler of our Liquor strategy
Trading Performance
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Progress against objectives
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Progress against objectives
1.TobeAustraliasmostresponsibleoperatoroflocalpubs
Commencedthe
introduction
of
voluntary
pre
commitment
functionalityonallgamingmachinesaheadofanyplannedstatelegislation,allowingcustomerstomonitortheirplayandsettimeorspendlimits
Industryleadinghotelandgamingcharterunderpinningour
commitmentto
responsible
service
2.Growournetwork
Targetedacquisitionswillcontinue
1hotel
opened
during
HY14,
total
venues
327
with
4
additionalvenuescurrentlyplannedforFY14,whichwillsupportanadditional9BWSand4DanMurphys
3.
To
evolve
in
meeting
customer
needs Continuedinvestmentinfamilyfriendlyfoodoffers
Expandedthedepthofourbarrangestocaterformorepremiumproductsandselectivelyaddingbrandedfoodoperations
Improvementstoouronlinepresenceacrossthebusinessincluding
new
mobile
enabled
venue
websites
FederalHotel,MtGambier
SailandAnchor,Fremantle
CarlyleHotel,DerwentPark
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NZ SupermarketsDave Chambers
Managing Director
New Zealand Supermarkets
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1.SignificantitemsincludetheoneofflossassociatedwithSCAPropertyGrouptransactioninHY132.InNZD
New Zealand Supermarkets
HY14comparablesales0.7%2,withtheQ2resultthestrongestsalesgrowthseenin18months
Continuedgrowthinmarketshare,customernumbersanditemssoldreflectingtherelevanceofourofferandsuccessofpromotionalactivity
Grossmargindecreaseimpactedbyahigherlevelofpromotionalactivity,particularlyinLonglife
Continuedtoincreaseourcompetitivenessinthemarketandhaveloweredshelfpricesonarangeofproducts,includingthroughourPrice
Lockdownprogram
which
delivers
customers
longtermpricereductionsonarangeoftheirfavouritegroceries
CODBresultreflectsstrongcostmanagementacrossthebusinessthroughimprovedproductivityinDCsandsupportoffices
Excludingtheadditionalrentalexpense(netofdepreciation)followingthedivestmentoftheSCAPropertyGroupinFY13andbeforesignificantitems1
CODBdecreased22bps2
EBITincreased
6.0%2
EBITmarginwasup19bps2
Successful promotional activity and strong Fresh sales delivering results
NZD HY 3 HY 4 ChangeBeforeSignificantItems1
Sales
($m) 2,944 3,020 2.6%
EBIT($m) 162.3 164.4 1.3%
FundsEmployed($m) 3,056.0 3,137.7 2.7%
Grossmargin(%) 23.28 23.25 (3)bps
CODB(%) 17.77 17.81 4bps
EBITto
sales
(%) 5.51 5.44 (7)
bps
ROFE(%) 5.17 5.17 bps
Trading Performance
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Progress against objectives
1.Customervalueandinnovativeoffers
Customershave
responded
well
to
the
launch
of
Price
Lockdown,supportedbystronginstorecommunication
Producesalesgrowthoutperformedoverallgrowthwithourfocusedgrowerprogram,supportedbystronginstoreexecution,maximisingseasonalsalesopportunities
2.Leveragelocalsourcing
OurpreferenceinNewZealandistosourcelocallyasitisimportanttoourcustomersandsupportsthelocalcommunitiesinwhichweoperate
96%
of
sales
are
sourced
from
suppliers
that
are
owned
or
haveabaseinNewZealand,with70%ofownbrandsalesfromlocallysourcedproducts
Workingwith1,200NewZealandsuppliers,includinghundredsoflocalfarmersandgrowers
3.Multi
option
Salesfromcountdown.co.nz,NewZealandsleadingonlinefoodsite,delivereddoubledigitsalesgrowthforthehalfyear
Serving99%ofNewZealandthrough52fulfilmentstores
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Progress against objectives
4.Supply
chain
EfficienciescontinuefromthereconfigurednationalandregionalDCoperationsstructure,withcostsasapercentageofsales(inNZD)decreasingby6bpsinHY14
Instore
product
availability
remained
strong
duringthehalf
5.GrowCountdownandfranchisenetwork
2Countdown
stores
opened,
with
the
networknow168stores
3additional(net)CountdownstoresduetoopeninFY14
Total
franchise
stores
now
56
with
3
additionalstorestoopeninFY14
Ourfranchiseesarecontinuingtoinvestintheirstoreswith29%ofthefranchisenetworknowtradinginthenewformats
(16%
in
prior
year)
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GENERAL MERCHANDISE
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GENERAL MERCHANDISEKAREN BOZIC
Acting Director of Big W
GENERAL MERCHANDISE
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GENERAL MERCHANDISE
Salesgrowthwas0.2%forHY14,impactedbythetimingoftheToySaleandthebusinesstransformationasanticipated
Tradingconditionscontinuetobechallengingwith
strong
competition,
ongoing
price
deflation
(HY144.1%)andincreasedpromotionalactivity
Grossmarginimprovementreflectsbetterbuying,shiftsinsalesmixandtheacquisitionof
EziBuy.
This
was
achieved
despite
higher
levels
of
clearanceactivityincategoriesbeingrationalised
CODBincreasereflectsnewstoresyettoreachmaturity,theEziBuyacquisitionandlowersalesgrowth
Fundsemployed
increased
53.9%,
which
was
impactedbythetimingofcreditorpaymentsrelativetothereportingdatesandincludestheacquisitionofEziBuyaswellasthecontinuedrolloutandrefurbishmentofBIGWstores
Transformation delivering profitable growth in the future
HY 3 HY 4 ChangeSales($m) 2,447 2,452 0.2%
EBIT($m) 129.5 120.5 (6.9)%
FundsEmployed($m) 709.8 1,092.7 53.9%
Grossmargin(%) 31.47 32.90 143bps
CODB(%) 26.18 27.99 181bps
EBITtosales(%) 5.29 4.91 (38)bps
ROFE(%) 16.11 11.56 (455)bps
Trading Performance
30
Progress against objectives
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Progress against objectives
1.Transformingourbusinessforthefuture
CommencedourtransformationofBIGW,focusingoncategoriesofhighcustomerimportancewhichwillprovidemediumto
longterm
profitable
growth
Hardgoodstransformationwillencompasssignificantchangeaswerationaliseandmakewayfornewandexpandedcategories
Firststagechangesarebeingimplemented
acrossour
store
network
(50
stores
in
HY14,
82plannedinthesecondhalf)toexpandourcoreofferincategoriessuchasToysandFootwear
FocusedonenhancingBIGWreplenishmentsystems
and
supply
chain
capabilities
Implementedanewstoremanagementstructuretoimprovethealignmentofinstoreleadership
31
Progress against objectives
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Progress against objectives
2.Stronggrowthinbrandsthatwinon
value
everydayPleasinggrowthinApparelwithstrongresults
deliveredthroughexclusivebrandssuchas'PeterMorrissey'andthe'MichelleBridges'and'GuyLeech'activewearranges
Ournew
'Lee
Cooper'
range
is
showing
pleasingearlyresults
Homedepartmentalsoperformedwell,particularlyKitchenwareandHomeStorage,withcustomersenjoyingthebenefitsofour
exclusiveand
branded
product
ranges
3.Realisingourmultioptionambition
LeveragingEziBuy'sworldclass
distributioncapabilities
and
expertise
in
directtoconsumerretailingtoenhanceourmultioptionoffer
eBooksofferlaunchedinSeptemberwith40,000+titlesdownloadedinHY14
ImplementedClick
&
Collect
across
our
entire
networkinNovember
32
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Home Improvement
HOME IMPROVEMENT
MATT TYSONManaging DIRECTOR
Home Improvement
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OurMastersnetworkcontinuestogrowstrongly,
with38storestradingatHY14
Masterssalesup49.4%,withstoresnowhaving
tradedonaverage,for15months
MastersEBIT
loss
of
$71.9m
for
the
half
year
Weremainfocusedonexecutingourplanto
achievebreakeveninMastersduringFY16by
Increasingsalesperstore
Improvinggross
margin
Drivingefficienciesinstore
Increasingfractionalisationofcostsinthe
distributionandsupportnetwork
HomeTimber
and
Hardware
sales
up
7.8%,
with
recentlyrefurbishedcompanystoresachieving
pleasinggrowth,withmoreplannedinFY14
TherelationshipwithourJointVenturepartner
Lowesremainsstrong.Theyhaveagainextended
thedate
for
opening
their
put
option
exercise
period
Home ImprovementAustralia's fastest growing Home Improvement business
$796M
HOME IMPROVEMENT Sales
25.0%
Home timber AND hardware SALES
MASTERS SALES
$393M 49.4%
$403M 7.8%
Trading Performance
or
or
or
34
Progress against objectives
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1.Improvesalesperformance
Frequencyof
return
customer
visits
increased
through
tailoredoffers
StrongtradinginKitchens,AppliancesandGardeningdemonstratestheappealofourdifferentiatedoffer
AustraliasBestNewOnlineRetaileratthe2013ORIAs
Focuson
trade
and
serious
DIY
customers
at
Home
TimberandHardwarewiththe'GoWheretheTradiesGo'brandcampaigndrivinganincreaseinstorevisitationsandtradesales
HomeTimberandHardwarewasrecentlyawarded
HardwareStore
of
the
Year
at
the
Roy
Morgan
CustomerSatisfactionAwards
2.Enhanceinstoreoffer
OurMastersBestPriceGuaranteecontinuestoresonate
wellwith
customers.
We
will
beat
all
prices
on
identical
itemsby10%,bothinstoreoronline
ExpandedourrangeofexclusivebrandsavailableinMasters
Workinginpartnershipwithstrategicvendorsto
introduceinnovative
products
into
the
Australian
market
Progress against objectives
35
Progress against objectives
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3.Continuetodrivecostefficiencies
Significantprogress
in
reducing
days
stock
on
hand
in
Mastersthroughsupplychainimprovementsandinventorymanagement
Pleasingresultsfromcostsavinginitiativesinstores
Commencedthe
expansion
of
our
Home
Timber
and
HardwareDCinNSWwhichwilldelivercostsavings
4.SuccessfullyrolloutnewMastersstores
7
stores
opened
3
ahead
of
our
plan
for
the
half
Remainontracktoopen18storesinFY14
5.Continuetobuildtheteam
Announced
the
appointment
of
Matt
Tyson
as
ManagingDirector
Continuedinvestmentintrainingforemployees,enhancingourreputationforsuperiorcustomerservice
Progress against objectives
36
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37
Balance Sheet
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Balance Sheet
$million FY13 HY13 HY14Change
HY14/HY13
CONTINUINGOPERATIONS
Inventory 4,205.4 4,498.9 4,779.8 6.2%
TradePayables (4,080.0) (5,363.0) (4,809.7) (10.3)%
NetInvestmentinInventory 125.4 (864.1) (29.9) (96.5)%
Receivables 985.2 1,032.0 990.4 (4.0)%
OtherCreditors (3,086.1) (3,090.3) (3,191.2) 3.3%
WorkingCapital (1,975.5) (2,922.4) (2,230.7) (23.7)%
FixedAssetsandInvestments 9,564.8 9,020.2 9,991.0 10.8%
IntangibleAssets 5,784.3 5,637.6 6,280.4 11.4%
TotalFundsEmployed 13,373.6 11,735.4 14,040.7 19.6%
NetTaxBalances 425.2 406.1 386.6 (4.8)%
NetAssets
Employed 13,798.8 12,141.5 14,427.3 18.8%
NetRepayableDebt1 (3,746.9) (2,874.7) (3,532.9) 22.9%
OtherFinancialLiabilities2 (751.4) (663.5) (796.3) 20.0%
NetAssets ContinuingOperations 9,300.5 8,603.3 10,098.1 17.4%
NetAssets DiscontinuedOperations
TotalNet
Assets 9,300.5 8,603.3 10,098.1 17.4%
Shareholders'Equity 9,028.4 8,333.5 9,827.8 17.9%
NoncontrollingInterests 272.1 269.8 270.3 0.2%
TotalEquity 9,300.5 8,603.3 10,098.1 17.4%
Inventoryincrease
was
primarily
driven
by
new
store
openings,inparticular33AustralianSupermarkets(net)
and13MastersstoressinceHY13andincreaseddirect
globalsourcing
WorkingCapitalwasimpactedbydifferencesinthe
timingofcreditorpaymentsrelativetothereporting
dates(impactapproximately$700m).Adjustingforthis,
workingcapital
was
in
line
with
the
prior
half
year
FixedAssetsandInvestmentsincreasereflectsongoing
propertydevelopmentandcapitalexpenditure,with
139newstoresand96refurbishmentssinceHY13,
offsetbyongoingdepreciation
IntangibleAssetsincreasereflectstheacquisitionof
EziBuyand
increased
intangibles
in
our
New
Zealand
SupermarketsbusinessattributabletothestrongerNew
Zealanddollar
NetRepayableDebtwasimpactedbydifferencesinthe
timingofcreditorpaymentsrelativetothereporting
datesandtheacquisitionofEziBuy
OtherFinancial
Liabilitiesincrease
largely
reflects
an
increaseintheLowesputoptioninourHome
Improvementbusinessto$675.4m
Shareholders'Equityincreasereflectsprofitsgenerated
bytheGroupoffsetbythepaymentofdividends
1. Includescash,borrowings,hedgeassetsandliabilities
2. PrimarilyrepresentstheLowesputoptionandtheALHgamingentitlementliabilityresultingfromtheFY13changestotheVictoriangamingregulations
38
Average inventory days for continuing operations
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Average inventory days for continuing operations
1.ExcludesHomeImprovementandinHY14alsoexcludesincrementalglobalsourcedinventoryNote:Averageinventorybasedon13monthsrollingaverage
NumberofDays
31.5
31.6
34.01
33.31
32.11 32.6
HY14
HY13
HY12
HY11
HY10
Inventory levels were well controlled during the period
Comments
Average inventoryincreased
by2.9daysdrivenby
Mastersstorerollout
Increasedbulkwine
holdingsinourLiquor
business
Increaseddirect
global
sourcing
ExcludingHomeImprovement
andincrementalglobal
sourcedinventory,average
inventory
increased
0.7
days Closing inventorydayswere
up0.1daysonHY13
35.3
38.2
39
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Shareholder payouts
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Shareholder payouts
$billion
Consistent growth in dividends
Comments
InHY14,wehavecontinuedtogrowdividendpaymentstoshareholders
PayoutratioinlinewithHY13
NosharebuybackactivityanticipatedinthesecondhalfofFY14
0.1 0.2 0.2 0.2
0.3 0.4
0.5 0.6
0.7 0.7 0.7 0.8 0.8
0.20.2
0.3 0.3
0.4
0.5
0.6
0.70.7
0.80.9
0.9
0.5
0.1
0.3
0.7 0.5
0.3
0.9
0.6
0.5
0.7
0.9
1.1
1.3
1.7
2.2
1.6
2.2
FY11FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10
Buy
back
Interimdividend
FY12FY02
Inspeciedistribution
HY14FY13
Finaldividend
41
Return on funds employed1 from continuing operations
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Return on funds employed from continuing operations
BEFORE Significant ITEMS
Percentage
15.8
15.4
16.7
17.7
14.9 18.02
17.62
HY14
HY13
HY12
HY11
HY10
Comments
ROFEfromcontinuing
operationsbeforesignificant
itemsdecreased
87
bps
to
14.9%drivenby
Theimpactofdifferences
inthetimingofcreditor
paymentsrelativetothe
reportingdates
Thecontinuinginvestment
inourHomeImprovement
business
ROFEfromourmature
businessesincreased33bps
excludingdifferencesinthetimingofcreditorpayments
1. Basedonaverageofopeningandclosingfundsemployed2. ExcludingtheimpactofdifferencesinthetimingofcreditorpaymentsrelativetothereportingdatesandthecontinuinginvestmentinourHomeImprovementbusiness
42
Outlook
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Outlook
Woolworthsremains
well
positioned
in
its
market
segments
and
has
a
strong
andsustainablebusinessmodel
WepreviouslyprovidedguidanceforFY14netprofitaftertaxfromcontinuing
operationsto
grow
in
the
range
of
4%
7%
(on
a
normalised
52
week
basis
excludingsignificantitems)
Whilstsomeofourbusinessescontinuetoexperiencechallengingtrading
conditions,we
have
seen
good
progress
against
our
Strategic
Priorities
which
havedeliveredsustainableprofitgrowthforHY14
Wehaverevisedourpreviousguidanceandnowexpectnetprofitaftertaxfrom
continuingoperations
to
grow
in
the
range
of
5%
7%
(on
a
normalised
52
week
basisexcludingsignificantitems),subjecttonosignificantdeteriorationin
tradingconditions
43
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COMPANY
RESULTSHALF YEAR ENDED
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45
Gross profit margin from continuing operations
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Gross profit margin from continuing operations
Percentage
27.04%
26.95%
26.33%
26.18%
25.94%
HY13
HY12
HY11
HY10
Continued to invest in lower prices delivering greater value to customers
HY14
Comments
Grossprofit asapercentageofsalesfromcontinuingoperations
increased9
bps
on
the
prior
year reflecting
Improvementsinbuying
Moreeffectivepromotionalactivity
Growthin
exclusive
brand
ranges
Positivechangesinsalesmix
Wehavecontinuedtoreinvestinlowerprices,deliveringgreater
valueto
customers
as
evidenced
by
continuedaveragepricedeflationinAustralianFoodandLiquorandBIGWaswellaslowinflationinNewZealandSupermarkets
46
CODB / sales from continuing operations before
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CODB / sales from continuing operations before
significant items
Percentage
20.61%
20.51%
19.97%
19.71%
19.65%
HY13
HY12
HY11
HY10
HY14
A strong result given ongoing cost pressuresComments
CODBasapercentageofsalesfrom
continuing
operations
before
significantitems increased10bpsonthepriorhalfyear,to20.61%
ExcludingnoncomparableadditionalnetcostsfollowingtheSCAtransactionandtheHome
Improvementbusiness which
remainsinstartupphase,CODBasapercentageofsalesforcontinuingoperationsbeforesignificantitemsdecreased5bps,astrongresultinlightofalargenumberof
newstores
47
Capital expenditure half year
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$millionHY13
ActualHY14
Actual
NewStores 140 104
Refurbishments 2361 179
GrowthCapex 376 283
SupplyChain,IT,MultioptionandStayinBusiness
128 214
HomeImprovement 65 56
NormalandOngoingCapex 569 553
PropertyDevelopments
(net
of
sales)
excludingHomeImprovement 224 174
PropertyDevelopments(netofsales)HomeImprovement
134 152
NetCapexbeforeSCAPropertyGrouptransaction
927 879
1. Includes106minorrefurbishmentsinAustralianSupermarkets
Capital expenditure half yearNewStores1 Refurbs
Storenumbers HY13 HY14 HY13 HY14
Australian
Supermarkets 17 26 4
2
13Liquor 41 22 23 24
NZSupermarkets 4 2 2 1
Petrol 8 15 5 7
BIGW 4 3 2 1
EziBuy 4
Hotels 32 1 5 8
HomeTimberandHardware 1
Masters 10 7
Group 116 80 41 55
1. Grossstoreopenings(includingacquisitions)2. Excludes106minorrefurbishmentsinAustralianSupermarkets
NormalandOngoingCapex$m,Depreciation%toSales NormalandOngoingCapex$m,Capex%toSales
0.00%
0.40%
0.80%
1.20%
1.60%
0
300
600
900
HY10 HY11 HY12 HY13 HY14
0.00%
1.00%
2.00%
3.00%
4.00%
0
300
600
900
HY10 HY11 HY12 HY13 HY14
Depreciationasa%toSalesCapexSpend$m Capexasa%toSalesCapexSpend$m
48
Capital expenditure full year
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$million 2014Previous
FcstCurrent
Fcst Var
NewStores 250 276 26
Refurbishments 472 427 (45)
GrowthCapex 722 703 (19)
SupplyChain,IT,MultioptionandStayinBusiness
603 644 41
HomeImprovement 140 129 (11)
NormalandOngoingCapex 1,465 1,476 11
PropertyDevelopments
(net
of
sales)excludingHomeImprovement 461 210 (251)
PropertyDevelopments(netofsales)HomeImprovement 420 312 (108)
NetCapexbeforeSCAPropertyGrouptransaction
2,346 1,998 (348)
Capital expenditure full year
$million FullYear2012
Actual2013
Actual2014Fcst
NewStores 346 300 276
Refurbishments 268 478 427
GrowthCapex 614 778 703
SupplyChain,IT,MultioptionandStayinBusiness
373 390 644
HomeImprovement 137 110 129
NormalandOngoingCapex 1,124 1,278 1,476
PropertyDevelopments
(net
of
sales)
excludingHomeImprovement 552 343 210
PropertyDevelopments(netofsales) HomeImprovement
374 296 312
NetCapexbeforeSCAPropertyGrouptransaction
2,050 1,917 1,998
NormalandOngoingCapex$m,Capex%toSalesNormalandOngoingCapex$m,Depreciation%toSales
0%
1%
2%
3%
0
500
1,000
1,500
2,000
2010 2011 2012 2013 2014
Depreciationasa%toSalesCapexSpend$m
0%
1%
2%
3%
4%
0
500
1,000
1,500
2,000
2010 2011 2012 2013 2014
Capexasa%toSalesCapexSpend$m