Woolworths Group - Full Year Results Announcement for FY24
WOW (WOW) Share Update August 2024 Tuesday 27th
Woolworths Group Reports Steady Growth Amidst Economic Challenges
Woolworths Group Limited (ASX: WOW) has released its full-year results for the fiscal year ending 30 June 2024, showcasing steady growth despite economic challenges.
Instant Summary:
- Group sales grew by 3.7% normalized for the 53rd week.
- Australian Food sales increased by 3.7%, with strong eCommerce growth.
- Group eCommerce sales reached $7.96 billion, up 18.5% normalized.
- Group EBIT increased by 1.1% normalized, driven by Australian Food and B2B.
- A special dividend of 40 cents per share announced, releasing $209 million of franking credits.
Financial Performance Overview
Woolworths Group reported a 3.7% increase in normalized sales for the fiscal year 2024, despite facing economic challenges and changing customer expectations. The company's Australian Food segment saw a 3.7% rise in normalized sales, with strong eCommerce growth contributing significantly.
In the second half of the year, inflation in the Food and BIG W segments moderated as Woolworths lowered prices and passed on cost savings to customers. Average prices in Woolworths Food Retail decreased by 0.2% in Q3 and 0.6% in Q4 compared to the previous year.
eCommerce and Digital Growth
Group eCommerce sales reached $7.96 billion, representing an 18.5% increase on a normalized basis. WooliesX, the company's digital and eCommerce division, played a key role in this growth, with normalized sales up 19.8% and contributing significantly to Australian Food's sales and EBIT growth.
Segment Performance
Australian Food's normalized EBIT increased by 6.0%, driven by strong eCommerce performance and cost management. However, New Zealand Food and BIG W faced challenges due to value-conscious customers and competitive pressures. New Zealand Food's EBIT declined by 57%, while BIG W's EBIT dropped by 90%.
Strategic Initiatives and Acquisitions
Woolworths completed the acquisition of a 55% interest in Petstock Group and sold a 5% stake in Endeavour Group, returning $489 million to shareholders via a special dividend. The company also agreed to acquire the remaining 35% of PFD from the Smith family.
Outlook and Leadership Transition
Looking ahead, Woolworths remains optimistic due to improving customer scores, item growth, and lower inflation. However, the company acknowledges ongoing financial stress among customers due to mortgage and rent pressures. Brad Banducci, the outgoing CEO, expressed confidence in the future under the leadership of incoming CEO Amanda Bardwell.
The steady growth in sales and strong performance in the eCommerce segment are positive indicators for Woolworths Group's stock. However, the challenges faced by New Zealand Food and BIG W could weigh on investor sentiment. The special dividend and strategic acquisitions are likely to be viewed favorably by shareholders.
Investor Reaction:
Analysts are likely to have mixed reactions, with some expressing optimism about the company's digital growth and strategic initiatives, while others may be concerned about the performance of New Zealand Food and BIG W. The special dividend is expected to be well-received by investors.
Conclusion:
Investors should keep an eye on Woolworths Group's continued efforts to navigate economic challenges and leverage digital growth. The leadership transition and strategic initiatives will be crucial in shaping the company's future performance.