Woolworths who have been expanding sales of CE products via their Harris Technology, Dick Smith, Power House, Tandy and Big W stores have reported that second-quarter sales growth more than doubled as shoppers spent more on consumer electronics.
Sales rose 22 percent to A$10.2 billion ($7.7 billion) in the three months ended Jan. 1 from A$8.3 billion a year earlier, Sydney-based Woolworths said in a statement to the Australian Stock Exchange today. Second-quarter sales rose 9.4 percent in the year earlier. Sales of consumer electronics rose 19% which is 7% higher than arch rival Harvey Norman. Woolworths said that Consumer Electronics has continued to enjoy strong growth with sales for the half increasing by 17.4% and for the second quarter increasing by 18.6%. Comparable sales growth for the second quarter was 12.3% (1stquarter 11.2%, half year 11.8%). “In particular strong sales growth was achieved across innovative technology categories, home entertainment and computers” Alvin Ng, General Manager, Dick Smith Electronics. During the half year 15 new Dick Smith Electronics, Powerhouse and Tandy stores were opened. Woolworths who are becoming a serious threat to Harvey Norman are attracting a lot of vendors who prefer to do business with them than with Harvey Norman. In addition vendors like Acer and Samsung are reporting record sales via the retail giant.
Chief Executive Officer Roger Corbett, who retires this year, has spent A$4 billion in the past two years expanding Woolworths operations to tap new sources of growth. The expansion helped counter a 14 percent surge in fuel prices that has crimped consumer spending. “Sales in all our divisions have continued to strengthen in the second-quarter reflecting a solid December trading period,” Corbett, 63, said in the statement.
Corbett reaffirmed his forecast for full-year net income to rise between 10 percent and 15 percent, excluding the first-half acquisitions of Foodland Associated Ltd.’s New Zealand business and Taverner Hotel Group. In 2005, Woolworths had net income of A$790.5 million. Woolworths shares rose 36 cents, or 2.2 percent, to A$16.93 at 10:44 a.m. in Sydney. The stock has returned 23 percent to shareholders, including dividends, in the past 12 months, compared with 18 percent for Coles Myer Ltd., Australia’s biggest retailer.
Sales of food and liquor, which account for three-quarters of Woolworths’ revenue, rose 22 percent to A$7.5 billion. Sales at supermarkets open at least a year rose 4.2 percent, up from the 3 percent pace of the year earlier. Fuel sales rose 29 percent to A$1.1 billion, as gasoline prices rose and Woolworths opened new filling stations. The retailer offers a 4 cents-a-liter fuel discount to shoppers who spend A$30 or more at one if its supermarkets.
The price of unleaded fuel averaged A$1.19 a liter during the quarter, up from A$1.04 a year ago, according to the Australian Automobile Association.
Sales at the hotels unit, Australia’s biggest owner of pubs, were A$202 million in the quarter. Woolworths added the A$380 million Taverner Group to its pubs division in October, building on the A$1.3 billion acquisition of Australian Leisure and Hospitality Group in 2004.
Revenue at the Big W discount stores rose 8.4 percent to A$1 billion in the quarter. At stores open at least a year, sales rose 2.9 percent.
Consumer electronics sales increased to A$351 million, driven by demand for iPods and flat panel televisions.
Woolworths stock is rated the equivalent of “buy” by five of the 13 analysts tracked by Bloomberg. Eight analysts rate it “hold” with none recommending investors sell the shares.