Woolworths posts profit rise due to increased sales during covid

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Woolworths says increased spending on groceries and at-home entertainment during the coronavirus pandemic has boosted its bottom line, allowing it to increase its interim dividend payout to shareholders.

The supermarket and retailing giant posted a net profit after tax for the first half of 2021 financial year of $1.135bn, a 28 per cent jump on the same period last year.

Woolworths chief executive Brad Banducci said the first half of the current financial year was still impacted by COVID-19 and prompted a continuation of the spending shift towards essential goods and services.

“The first half … continued to be impacted by COVID, with elevated sales and higher costs as we worked to maintain a COVIDSafe environment for our customers and team,” Mr Banducci said.

“While we have all been living in this uncertain environment now for 12 months, ongoing localised outbreaks remind us that we need to remain both vigilant and agile.”

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Elevated sales in core businesses such as supermarkets, drinks and BigW were able to offset the higher incurred costs of the pandemic and the major slump in trading within its hotels division.

Sales at Woolworths Metro stores over the period were lower as a result of less foot traffic in CBD locations, declining 6.7 per cent to $456m.

Mr Banducci said the company had made no decision on axing any CBD sites but was monitoring Metro store performance.

“It is an ongoing question for us,” he said. “We have unfortunately had to (already) mothball a number of our Metro stores.”

Group earnings before tax and interest rose 10.5 per cent over the period to $2.09bn.

Total revenue rose 10.6 per cent to $38.85bn, with the company noting stronger supermarket sales and at-home consumption of alcohol and entertainment, as a result of the pandemic, had prompted a rise in turnover.

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“ (BigW) Sales increased in all destination areas and were buoyed by seasonal sales events such as Halloween, Click Frenzy, Big Sale (Black Friday) and Christmas,” Mr Banducci said.

Mr Banducci also noted BigW digital activity over the period had surpassed in-store foot traffic for the first time.

Woolworths declared an interim dividend of 53 cents per share, with approximately $671m being returned to shareholders. It is a 15.2 per cent jump on last year’s dividend.

Woolworths chair Gordon Cairns said the group was on track for its liquor business Endeavour Drinks to be spun out by June this year.

“We had previously indicated that we were targeting calendar 2021 for a potential separation of Endeavour Group. Our plans are progressing well, with June the most likely date,” he said.