Dick Smith sale hurts Woolworths profit

Jane Harper
Herald Sun
August 24, 2012

RETAIL giant Woolworths says charges around the sale of the Dick Smith electronics business have dragged net profit for the year down 14.5 per cent.

The company today reported profit of $1.816 billion for the year to June 24, including a $420 million restructure provision and impairment loss for the Dick Smith chain.

Excluding the impact of the Dick Smith loss, net profit was $2.2 billion, up 3.6 per cent on last year.

Woolworths said the sale process of the remaining 348 Dick Smith stores in Australia and New Zealand was continuing.

The group’s Australian supermarkets business chalked up $2.94 billion in earnings before interest and tax, up 5.3 per cent from last year.

Sales revenue rose to $55.1 billion, was up 4.8 per cent from $52.6 billion in the previous year.

Sales were up across all the company’s divisions, made up of Australian food and liquor, petrol, Big W, hotels and New Zealand supermarkets.

Woolworths chief executive Grant O’Brien said the group’s result had been delivered despite the sector experiencing some of the toughest retail conditions in recent times.

He said he did not expect conditions to improve in the year ahead.

“We expect the Australian and New Zealand retail sectors to continue to experience challenging trading conditions with low consumer confidence continuing to dampen consumer retail spending in 2013,” he said.

“Woolworths has the ability to adapt to challenging economic circumstances and is proving it is a resilient business.”

Earnings at discount department store Big W were flat, up less than one per cent at $178.4 million.

“Total sales and earnings were slightly above last year, reflecting the relevance of our merchandise offer and strong cost control in a challenging trading environment,” Mr O’Brien said.

The new Masters home improvement chain, which opened its first store in September 2011, reported sales of $828 million for the year.

The group has 15 stores now open, with 150 sites planned over the next five years.

Mr O’Brien said the company was well-placed to cope with headwinds in the coming year.

“Woolworths has a clear strategy which is building momentum with benefits arising from continuing investment underpinning long term sustainable profit growth,” he said.

Woolworths’ shares opened trading today at $29.49.