Positive call to fill Woolies site

A YEAR since the iconic Woolworths chain fell into administration, Lynn's store - the flagship shop of the Vancouver Quarter - still remains empty.

Talking about the large empty premises, leader of West Norfolk Council, Nick Daubney, told the Lynn News: "I would think it would be a good thing that the space is filled and I hope it will be in the future.

"It is a big space and I know that major stores must be obviously nervous under current trading conditions, but Lynn has proved itself to be a vibrant centre so I hope that is a big attraction for other businesses."

Woolworths opened on New Conduit Street in March 2006, offering 45 full and part-time jobs but it shut, along with the Fakenham, Swaffham and Hunstanton branches, two months after the company went into administration in November 2008.

The Lynn News made several attempts to contact Vancouver Quarter manager Brad Curcillo but he was unavailable to comment.

In Hunstanton 15 jobs were lost, 21 jobs went in Fakenham and the Swaffham closure made 24 staff redundant.

The company, which had been struggling with debts of £385m, was taken over by administrators Deloitte.

The Warehouse Clearance Shop moved into the Fakenham site, on the Market Place, in May last year on a rolling license, creating about five jobs.

Will Bowers, a representative of Wildmoor Property, the site landlord, said: "It is very successful. It will be there certainly for the near future."

The old Swaffham Woolworths premises, also on the Market Place, was taken over by frozen food chain Iceland in January last year, which has proved to be a success. In total 23 positions were created from this move.

Dennis Tallon, manager of Swaffham community group the Iceni Partnership, confirmed: "Apparently it is doing extremely well. It's also brought in trade to other shops in the town. It is very positive."

Despite Hunstanton's Warehouse Clearance Shop - which replaced the Woolworths in January last year - shutting, the Lynn News has learned that the clothes shop M&Co, previously known as Mackays, will possibly be moving onto the site. However, the legal process has not been completed.

Paul Beal, chairman of Hunstanton Chamber of Trade, said: "It is super. If they are coming, a multinational business could pave the way for somebody else. It could be the start of something big."

Hunstanton Town Mayor, Cllr Christine Earnshaw, added: "It could be a real bonus. I think it is the ideal shop for the High Street."

Woolworths profit climbs 13%, positive outlook

Woolworths Limited (WOW) reported a net profit to $1.835 billion for the year ended 28 June, up a 12.8% from the prior year. The diversified retailer sold almost $1 billion worth of goods a week as solid growth was recorded across all key financial measures.

Looking ahead the group said it was expecting the strong sales growth to taper off in the current year without the positive effects of the government stimulus package and the influence of macro-economic factors such as the anticipated increase in interest rates in calendar 2010.

Mindful of this Woolworths said it expected group sales to grow in the upper single digits, while EBIT would grow faster than sales.

Net profit next year would grow in the range of between 8% to 11% Woolworths said.

Woolworths added, however, that the recently released hardware strategy had not been factored into forecast figures.

For the year to 28 June 2009, many of the key economic measures increased between 10% and 15%, including an 11.5% increase in EBITDA, an 11.7% increase in earnings per share and a 13% increase in the annual dividend to $1.04 per share.

Woolworths said the strong sales growth was recorded as the retailer reinvents its brands and refurbishes it stores. Currrently around 40% of Australian supermarkets have had a new format rolled out.

The group said the core the company’s future growth strategy was underpinned by refurbishment of its stores.

”Our long term cost advantages obtained under Project Refresh will be maintained and increased,” the company said.

Despite the core supermarket dominance of Woolworths, which with Coles has around an 80% market share, the retailer said it had room to grow across all its businesses.

Some of key drivers to successful expansion included through bolt-on acquisitions such as Macro Wholefoods and sourcing the goods from overseas, and investing in and leveraging supply chain expertise.

Furthermore, over the course of the year Woolworths opened 28 new supermarkets in Australia, with 21 new petrol stations.

Commenting on the result for the year chairman James Strong said the result was a good one in a difficult economic environment.

“Woolworths has a clear strategy well executed by an experienced team, which has underpinned this year’s result. The year has seen significant global economic challenges that will continue in the near term,” Mr Strong said.

”Woolworths is well positioned going forward and will continue to invest to develop both core and new business opportunities.”

Looking across the company’s divisions the Australian supermarket division was a standout performer, with EBIT climbing 17%.

BIG W EBIT also surged 25.9% as retailers turned to cheaper alternatives in difficult economic times.

The consumer electronics division fell 18% in total.

Meanwhile, Woolworths last year sold $5.2 billion worth of alcohol, almost the same as the total petrol sales at $5.5 billion.

Commenting on the dividend payout Mr Strong said the 13.0% increase in dividend per share to 104c from 92c in FY08 reflected the confidence that the Board has in the company’s operations, results and the continued focus to provide improved shareholder returns.

At the close of business Wednesday, Woolworths shares were up 7c to $28.70.

Farewell to Safeway

The much-loved Safeway brand in Victoria is to be abolished.

Parent company Woolworths Limited have decided to progressively re-brand all 129 Victorian supermarkets in the coming 12 months. Coinciding with this decision is the announcement that a new Woolworths logo has been developed, but the “Fresh Food People” moniker will remain.

Safeway was launched in Melbourne in 1963 when the American chain of the same name bought three locally-owned supermarkets and established Australian Safeway Stores Pty Ltd. Competing locally with rival Woolworths, Safeway slowly expanded into New South Wales and Queensland whilst Woolworths continued to expand in Victoria. In 1985, Safeway Inc. sold all of its Australian operations to Woolworths and the two supermarket chains merged. At the time, Safeway was considered to be a stronger brand and so the decision was made to that all Victorian stores would be named Safeway whilst the New South Wales and Queensland stores became Woolworths. And so it was until now.

Of course this re-naming process is not new to Tasmanians. In a situation reminiscent of the Victorian Safeway saga, Woolworths had been operating separate Roelf Vos and Purity brands (depending on which part of Tasmania they were located) since the two Tasmanian supermarket chains were acquired in the mid-1980’s. All supermarket brands were advertised as “The Fresh Food People” after 1986 and shared a common marketing strategy, which meant that national advertising jingles and campaigns had to be re-worked to fit in with the Roelf Vos and Purity identities. Eventually Woolworths came to the realisation that operating four nearly-identical brands was sheer madness and so in was in 2000 that Roelf Vos and Purity became history.

In the context of that upheaval, it remained a mystery why it was that Safeway was preserved where Roelf Vos and Purity hit the chopping block. I guess we all knew that it was simply a matter of time before Safeway suffered the same fate. Anyone who’s been into Safeway lately would have seen the subtle signs… all the own-brand products have been labelled as “Woolworths” rather than “Safeway” for quite some time.

It’s the end of an era for sure… farewell Safeway.

Woolworths CEO discusses profit result

ALI MOORE, PRESENTER: For more on today's Woolworths results I was joined earlier by the company's CEO, Michael Luscombe.

Michael Luscombe welcome to Lateline Business.

MICHAEL LUSCOMBE, WOOLWORTHS CEO: Thanks, Ali.

ALI MOORE: There's not a lot of companies that can be said to be having a lovely economic crisis, but it seems Woolworths might be one of them.

MICHAEL LUSCOMBE: I don't think anybody had a lovely economic crisis. We had a very challenging year, but thanks to a wonderful effort by our team we had another successful year.

ALI MOORE: What's your reading of the state of the economy right now, two months into this financial year?

MICHAEL LUSCOMBE: If I look at the food and liquor business, it's going even stronger than it was at the end of the year, so we're very comfortable that we're doing really well there. In terms of the consumer electronics business, underlying it's very strong but, of course, large screen TVs had a big uptick going into the Olympics last year.

We're still doing reasonably well there, but of course we're not selling huge volumes of large screen TVs and recorders that we sold prior to the Olympics. In general, merchandise it's going along very nicely. We certainly haven't got anywhere near the level of winter apparel that we had to clear last year. We've sold most of our winter apparel at full price which is great for the profitability of the business, but I'm thinking that we're doing OK.

ALI MOORE: Doing OK, I think you used some more optimistic words at today's presentation. You're having a pretty top start to the current year.

MICHAEL LUSCOMBE: Oh look, I think we're off to a good start, but one swallow doesn't make a summer.

ALI MOORE: What worries you? What could derail the outlook?

MICHAEL LUSCOMBE: You know, the thing that really keeps me concerned is making sure all of us, that's government, business, the community, the media, all try and focus on the positive. The one thing that will cause particularly discretionary spend to fall - along with other macroeconomic factors like interest rates and petrol et cetera - really is how I feel about my job, how I feel about the company I work for. If I'm worried about my company or my job or both, then I'm more likely to be a saver rather than a consumer. And, of course, the discretionary part of retail, thankfully we're not exposed to that to a huge degree, will certainly suffer. And of course the ripple effect through the economy is not a good thing. Really important to give as many Australians as much as possible confidence they're going to be in a job going forward.

ALI MOORE: Well against that background, how helpful is it to still have an official unemployment forecast of over 8 per cent?

MICHAEL LUSCOMBE: The official forecast is over 8 per cent. I personally have a view that it won't get that high. I'm certainly hopeful that it won't get that high.

ALI MOORE: Where do you think it will peak?

MICHAEL LUSCOMBE: Look, I think it might go into the sixes and I'd hope it wouldn't go past seven to be honest.

ALI MOORE: Notwithstanding your relative optimism on employment you've said the outlook for consumer spending is uncertain, but you're still prepared to give some pretty specific guidance. That puts you in a fairly rare category?

MICHAEL LUSCOMBE: Oh it does, you know. There's a great deal of discussion at board level about the fact that just about everybody has jumped overboard and doesn't give guidance anymore and one of the things Woolies has always done is put ourselves out there and promised and thankfully to date we've always delivered and our aim this year will be to deliver again.

I think it's actually challenging, a good thing to actually challenge yourself privately, but it's even more invigorating when you actually put it on public record and you know that if you don't make it you're going to have to face the music.

ALI MOORE: Yet the guidance for profit growth is between 8 and 11 per cent. You actually did better than that last year when you assumed conditions would have been worse than they're likely to be this year. So why 11 per cent at the top, at the top end when you did 13 per cent or just short of 13 per cent last year?

MICHAEL LUSCOMBE: Look, our guidance is the guidance that we have at the moment and there was a caveat around the macroeconomic conditions. So clearly we'll be in a much better positions when we get to the half to ascertain how the full year will go.

At the moment, we take a view ... we've always been a company that under-promises and over-delivers. At the moment, what we're promising is what we believe we can achieve and if we believe at the half we might be able to improve over that, we'll certainly advise the marketplace.

ALI MOORE: That would have to be a fair bet, wouldn't it? The forecast you've given doesn't include the move into hardware, the takeover of the Danks chain and the joint venture with the US retailer Lowes.

If you put in the Danks deal, what does that 8 to 11 per cent look like?

MICHAEL LUSCOMBE: It pretty much washes itself. So that the profit that we would anticipate from the Danks organisation would pretty much cover the vast bulk of the early expenditure of starting up the team for the larger format.

ALI MOORE: So net, net, it would make no difference?

MICHAEL LUSCOMBE: It would be slightly positive I believe, but it won't be wildly positive.

ALI MOORE: You say you're traditionally an organisation that traditionally under-promises and over-delivers. The target for the hardware business is 150 big box outlets or at least sites over the next five years. Just to clarify, how many do you think will actually be outlets and not just sites within five years?

MICHAEL LUSCOMBE: It usually takes at least 18 months from the moment that you do a deal on buying a site or do a lease deal prior to it being constructed. So typically you have about an 18-month to two-year lag.

So, you know, if you took a straight line approach, take a year off those numbers and you won't be too far out. But we might accelerate, if we're finding that it's being extremely well accepted then both parties have really decided that if we have to push the button even faster, then we will.

ALI MOORE: Is it true that Woolworths has approached Wesfarmers about buying K mart?

MICHAEL LUSCOMBE: I saw that in the papers today. I don't comment on speculation, but it's an interesting thought, isn't it?

ALI MOORE: Is it a thought that's crossed your mind?

MICHAEL LUSCOMBE: Oh look, you know, they've got same size boxes as Big W. Big W is doing really well. That operation, of course, hasn't been doing as well, so if they were looking to lose some of their property, we'd be more than willing to help them out.

ALI MOORE: Michael Luscombe, many thanks for talking to Lateline Business.

MICHAEL LUSCOMBE: My pleasure, Ali, as always.

Woolworths Eco Ambassador Program

Woolworths Limited wanted to enhance its existing sustainability strategy by engaging employees (across its 3,000 sites) to undertake positive behaviours that would reduce the company’s environmental impact. The communication challenge presented to OgilvyEarth was significant – 85% of Woolworth’s 188,000 employees had limited or no access to company intranet or email. A strategy session was held with key stakeholders around the creation of peer influencers, since named ‘Eco Ambassadors’, that could champion ideas and help develop a greater awareness of the everyday actions that could be taken. The Eco Ambassadors were trained via a half-day workshop, where they were equipped with everything they needed to make a difference. During the workshops, participants were taken through the challenges and engaged to play a part in delivering solutions. By highlighting Woolworths’ commitment to sustainability, the workshops equipped participants with tools and action plans to support their roles as mentors. Ultimately, this enabled them to act not only as a source of information and inspiration for other employees, but as a conduit for company-wide communication.

Woolworths boss sees early positive earnings, large growth opportunity in hardware

Woolworths Ltd expects its new venture into hardware stores to be earnings positive from the outset and says there is a large opportunity for growth, according to its chief executive Michael Luscombe.
On Tuesday, Woolworths announced it was entering the $24 billion Australian hardware market with a takeover bid for Danks Holdings Ltd, and was forming a joint venture with the second-largest US home improvement chain Lowe's Companies Inc.
The company booked a full-year profit of $1.8 billion on Thursday, on the back of strong earnings from its supermarket sector and retailer Big W.