Woolworths reports stronger sales, earnings and customer scores

Group says customer-led turnaround plans are paying dividends, with supermarkets a strong performer for the financial year

Woolworths has reported a 9.5 per cent rise in group earnings and 3.4 per cent growth in sales off the back of its long-term customer-led turnaround efforts and strong supermarket performance.

The ASX-listed retail group reported group sales from continuing operation were up 3.4 per cent in the year to 24 June 2018 to $56.72 billion, while earnings before interest and tax increased 9.5 per cent to $2.55 billion. Net profit was also up 12.9 per cent to $1.6 billion on continuing operations, or 12.5 per cent across the group to $1.72 billion.

The supermarkets division was a solid performer, reporting a 4.3 per cent increase in sales over the 52 weeks to $37.38 million, and a 9.6 per cent increase in EBIT to $1.76 billion. The Endeavour Drinks group, which includes Dan Murphy’s and BWS, also reported sales growth of 4.5 per cent to $8.27 billion, as well as a 2.8 per cent increase in EBIT to $516 million.

Less optimal was Big W, which reported a $110 million loss, a 26.9 per cent drop year-on-year. This was off less than 1 per cent sales growth to $3.57 billion. The group said lower prices, an improved product range, changes to store experience and an evolving digital offer did, however, see comparable items per basket increase by 3.5 per cent year-on-year, while customer transactions were up 1.4 per cent.

Woolworths Group CEO, Brad Banducci, highlighted strong customer satisfaction across Woolworths supermarkets as a major achievement, with an array of voice-of-customer (VoC) scores improving over the past 12 months. Overall customer satisfaction in June was up 4 percentage points to 81 per cent, sustaining levels reached in March.

Store-controllable VOC also stayed at 84 per cent in Q4, the third consecutive quarterly result. Woolworths records eight VOC measures including ease of pick up (up 12 points year-on-year), fruit and vegetables (up 8 points), on-shelf availability (up 4 points), range (up 3 points to 77 per cent) and weekend scores (up 4 points to 77, driven by increased trading).

The retained or higher results came despite the removal of single-use plastic bags at the end of June, an initiative Banducci admitted was a “headache” for the business. The group previously gave out about 3.2 billion bags a year.

Woolworths Group also noted positive customer feedback correlated with transactions growth, with comparable transactions up 4.2 per cent in FY18 and 3.6 per cent in Q4, 2018.

Woolworths is now planning to introduce Net Promoter Score (NPS) in FY19 as part of its short-term incentives customer feedback measures, a move the group said aligns with its ambition to provide ‘consistently good’ shopping experiences.

In FY18, Woolworths launched a new group purpose, ways of working and core values. Over the past year, it has also rebranded its home brand offerings, Select (now Woolworths) and Homebrand (now Essentials), work that encompassed 5000 products. Alongside this, 80 supermarket stores were renewed and 54 upgraded.

Another major area of focus for Woolworths over the past year has been investments into digital and data, spearheaded by its WooliesX division. Achievements include the national rollout of ‘pick up’ services across more than 1000 locations, two new customer fulfilment centres to support home delivery experiences, and improvements to underlying digital infrastructure.

As a result, VOC scores for online lifted 6 points to 79 per cent at the end of June, with total online sales up 30 per cent to $1.1 billion, representing more than 3 per cent of total supermarket sales in FY18. Of these, one-quarter were ‘pick up’ sales.

Banducci said more personalised engagement with customers led to an increase in Rewards customer loyalty program members to 10.9 million by end of June. Rewards VOC was also up 9 per cents to 71 per cent.

“Heightened customer expectations and competition will require us to continue investing in order to provide our customers with a seamless shopping experience with a number of exciting new initiatives expected to roll out over the course of FY19,” Banducci commented.

Overall, the group was pleased with the progress made in FY18, he said, even as customers adjusted to loss of single-use plastic bags, a competitor continuity program, meat and fruit and vegetable deflation and cycling of the ‘Earn and Learn’ program in the previous year.

“We remain energised by the material opportunities we have to create a better business for our customers, team members and shareholders in the future,” Banducci said.

“We expect sales momentum to improve over the course of the half. Our customer satisfaction metrics are broadly back to the levels prior to the removal of single-use plastic bags, including time in queue. Our overall brand metrics have also continued to improve relative to our competitors, including price perception, brand preference and quality of fresh.

“These customer and brand scores, along with our strong trading plans, give us confidence in the critical run into Christmas.”

But while supermarkets showed solid growth, Big W remains an area requiring further improvement. Although digital visits and some customer scores were up, Banducci said it was ultimately a year of “stabilisation” for Big W and admitted there was still a long way to go.

“Big W has started the journey to being a purpose-led organisation and the team and customers continue to be the primary focus,” the report stated. “For the year ahead, Big W will continue to invest in price to regain customer trust, reset ranges in-store, improve the convenience of the in-store and digital experience and improve stock availability.”

Woolworths is in the third year of a three-year turnaround strategy aimed at better utilising data, driving product innovation, improving customer service and lifting value.

Follow CMO on Twitter: @CMOAustralia, take part in the CMO conversation on LinkedIn: CMO ANZ, join us on Facebook: https://www.facebook.com/CMOAustralia, or check us out on Google+: google.com/+CmoAu

Join the newsletter!

Or

Sign up to gain exclusive access to email subscriptions, event invitations, competitions, giveaways, and much more.

Membership is free, and your security and privacy remain protected. View our privacy policy before signing up.

Error: Please check your email address.
Show Comments

Latest Videos

More Videos

Are you sure they wont start a platform that the cheese is white, pretty sure that is racist

Hite

New brand name for Coon Cheese revealed

Read more

Real digital transformation requires reshaping the way the business create value for customers. Achieving this requires that organization...

ravi H

10 lessons Telstra has learnt through its T22 transformation

Read more

thanks

Lillian Juliet

How Winedirect has lifted customer recency, frequency and value with a digital overhaul

Read more

Having an effective Point of Sale system implemented in your retail store can streamline the transactions and data management activities....

Sheetal Kamble

​Jurlique’s move to mobile POS set to enhance customer experience

Read more

I too am regularly surprised at how little care a large swathe of consumers take over the sharing and use of their personal data. As a m...

Catherine Stenson

Have customers really changed? - Marketing edge - CMO Australia

Read more

Blog Posts

Brand storytelling lessons from Singapore’s iconic Fullerton hotel

In early 2020, I had the pleasure of staying at the newly opened Fullerton Hotel in Sydney. It was on this trip I first became aware of the Fullerton’s commitment to brand storytelling.

Gabrielle Dolan

Business storytelling leader

You’re doing it wrong: Emotion doesn’t mean emotional

If you’ve been around advertising long enough, you’ve probably seen (or written) a slide which says: “They won’t remember what you say, they’ll remember how you made them feel.” But it’s wrong. Our understanding of how emotion is used in advertising has been ill informed and poorly applied.

Zac Martin

Senior planner, Ogilvy Melbourne

Why does brand execution often kill creativity?

The launch of a new brand, or indeed a rebrand, is a transformation to be greeted with fanfare. So why is it that once the brand has launched, the brand execution phase can also be the moment at which you kill its creativity?

Rich Curtis

CEO, FutureBrand A/NZ

Sign in