In what has been the catch cry of many CEOs this end-of-year financial reporting season, Woolworths Group CEO Brad Banducci said an “extremely challenging operating environment” resulted in a FY22 below the company’s “aspirations”.
“Supply chain disruptions, product shortages, team absenteeism and flooding led to an inconsistent customer experience and a financial performance,” Banducci said.
Snapshot
- Group sales: $60.8bn, up 9% from $56bn in FY21;
- EBIT: $2.6bn, down 2.7% on FY21;
- NPAT - before significant items: $1.5bn, up 0.7%;
- NPAT - after significant items: $7.9bn, up 282%;
- Ecommerce sales: $6.2bn, up 39% on FY21;
- Virgin plastic removed: >10,000t vs FY18 baseline; and
- Scope 1 & 2 emissions: down 31% on 2015 baseline.
Woolworths Group sales were up 9 per cent, or 5.1 per cent with PFD and Quantium were not taken into account.
Higher Covid related costs and the closure of some Big W stores resulted in EBIT declining by 2.7 per cent.
Banducci said supply chain disruptions and product availability affected customer experience, but Australian Food sales were up 4.5 per cent with above-market growth in every quarter. H2 had a strong EBIT growth of 9.7 per cent, which compensated for the difficult H1, resulting in a 0.3 per cent growth for the FY.
The group’s B2C ecommerce business WooliesX performed strongly, recording 42.3 per cent growth to $4.7 billion. It accounted for 10.3 per cent of retail sales. Banducci said ecommerce directly attributable profit margin increased in the FY because of increasing scale and improved efficiency and is now ANZ’s largest first party ecommerce business.
The group’s digital properties have an average of 19.4 million visits each week across websites and apps.
“Metro Food Stores sales increased six per cent due to new store growth with five net new stores opened during the year and increased traffic in On the Go stores.
“Woolworths Food Company’s own and exclusive sales increased by 4.8 per cent with the COOK, BBQ and Macro ranges growing strongly, despite growth being constrained by availability issues in the Household and Snacking categories,” Banducci said.
In April 2021, Woolworths increased its share in analytics company Quantium to 75 per cent for $223 million. The company then launched wiq, which combined the group and Quantium’sdata analytics capabilities.
“wiq is currently working on over 20 advanced analyticsuse cases across the group and has made solid progress in key strategic areas like promotional optimisation, tailoredranging and store and eCommerce process efficiency,” he said.
Banducci said the group is,“incubating a number ofdigital start-ups such as PetCulture, HealthyLifeand Metro60 that are driving innovation for our Group as we continueto learn from, and invest in, their growth and development”.
FY22 was the most difficult for the group’s Primary Connect business since Covid began, but Banducci said several milestones were met in its multi-year supply chain transformation.
“We opened four new major DCs during the year, including new Melbourne and Auckland Fresh DCsand transitioned two BIG W DCs from third parties to Primary Connect.
“Construction is progressing on our Moorebank regional and national DCs and our first automated customer fulfilment centre in Auburn,” he said.
The group is on track to complete its review of payroll underpayments, with more than 90 per cent of the relevant teams and payroll costs tested to date.
