9News: Woolworths staging a comeback…but is is enough?

Woolworths (ASX:WOW) is staging a comeback; supermarket sales are up, but not enough to produce a rise in profits

Peter Hitchner: Woolworths is staging a comeback

Supermarket sales are up, but not enough to produce a rise in profits.

The retail giant is now hoping major changes in store will drive a return to black.

Finance editor, Ross Greenwood.

Ross Greenwood: Woolworths was once one of the most profitable supermarkets on the planet.

Not today though as it keeps spending shareholders money to keep prices down, to stay competitive.

XX: Good for consumers, not so good for shareholders.

Ross: In the past year, Woolie’s profit from ongoing  operations was $1.42 billion, down 3.6%.

But the profit fall comes despite an increase in sales.

Especially in its supermarkets.

Brad Banducci: The plan, unequivocally, for us has been to invest in our customers to get them to put our first and to do likewise for our team.

Ross: Woolworths has used around a billion dollars  of shareholders money but the supermarket bosses are trying to find new ways to run their stores, to stop shareholders subsidizing your grocery bill.

Dr Gary Mortimer: They need to stop the price discounting

Craig Parker: They need to maintain that mighty position in the face of competitive pressures.

Ross: But these pressures also mean that the supermarkets themselves will change – the way you shop will change.

Now a really good example is the latest coca-cola product, the sugar-free coke.

Well Woolworths didn’t stop that – deliberately.

Because it wanted more shelf space for water products.

There’s also, in the future, going to be more generic  brands.

Brad: I think ALDI have shown us what you can do with have an exclusive brands in the store.

Ross: And so-called phantom brands.

Dr Gary: A phantom brand is basically a supermarket brand that isn’t clearly branded

Ross: Just don’t tell the Woolies’ boss about those phantoms…

Brad: I would dispute the word phantom brand effective and an inside of Woolworths

Ross: But while supermarkets are the biggest issue for Woolies there’s another question…

Can discount chain Big W, that lost $150 million last year, be fixed for now?

The boss is sticking with it

Ross Greenwood; Nine News

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