The Half Year Profit Results presentation was today. Here are some key points from Tjeerd's section.
If anyone has any questions about it, let me know and I will try and answer them
The supermarket division is performing well, with sales up 5.9% and EBIT up 6.3%. 25 new stores were opened in the first half of the financial year, and 14 more are scheduled to open in the second half, making a total of 39 stores in the financial year which is a record for the company.
The new vision to promote growth in the division is pushing ahead, with four key areas:
-First choice for fresh food
-Unbeatable Value
-Exciting new offers
-Shopping tailored for our customers
Our people is what separate us for the competitor. There have been some changes within the senior Supermarket management team.
Tjeerd Jegen - MD Australian Supermarkets and Petrol
Rod Evenden - GM Strategy
Cheryl Rae - GM HR
Lizzie Ryley - GM Marketing
David Marr - GM Finance
Gordon Duncan - GM Private Label
Mike Whalan - GM Design & Construction
Pat McEntee - GM Fresh
Ziggy Kwarcinski - GM Store Operations
Alex Dower - GM Longlife and Private Label (due to start in April)
A new advertising agency will be announced shortly, after a review late last year.
Good growth in fresh - particularly bakery, deli and meat. Supply chain enhancements are being made, with the goal of reducing lead time from "soil to shelf" by one day. So far, it has been reduced by half a day. This initiative is in line with customer feedback saying that they want "fresher for longer"
The 2015 store format is generating significantly higher fresh food sales and the "Recharge" pilot stores are performing even better. Improvements from Recharge will be integrated with new stores and refurbishments.
Woolworths is continuing to build on a strong meat business. We've been buying our meat directly from farmers for over 20 years, which is a unique skill in the retail industry. We have achieved Meat Standards Australia (MSA) accreditation on 13 key cuts, and are the only national supermarket to do this. The MSA standard means that the beef matures for longer, and changes in the deboning process and supply chain.
The MSA accreditation means tender, juicy beef, no matter how the customer cooks it. Since getting the accreditation, double digit growth has been recorded in the category on a traditionally flat market. More cuts will be launched in line with the change of seasons, and an MSA lamb range is going to be launched.
Woolworths is making good progress on providing value. A new ticketing system has been launched which highlights savings made on specials. We have implemented new ways on giving value at key events, e.g. $5 off ham at Christmas, $10 off leg of lamb for Australia Day. These offers had 97% validation, although some difficulty was experienced coping with demand.
Reducing shrinkage is a priority, and there is currently 30 projects in different phases designed to combat shrinkage. In the first half of the financial year, shrinkage has been reduced by double digit basis points, and Tjeerd is confident that this trend will continue.
Tjeerd likes customers being involved in decisions, which has resulted in "category labs" with six dedicated teams. These teams have completed "deep dives" on 35 key categories.
Customer talkback sessions are also taking place, with customers, a store manager, an area manager and an independent moderator. Customers are free to voice their likes or dislikes about the store. This process is good for the store manager, who can make improvements to their store, and good for the company who can make nationwide improvements to key areas like layout of stores, space utilisation and ranging.
Private label products are important, but customers still like range. The most important part of our current range is a strong national proprietary brands offering, supported by private label products. Woolworths is working with key national suppliers to support growth in proprietary brands. Some key examples are the launch of OMO Laundry Pods which have 3 times higher customer value than traditional laundry powder or liquid. Woolworths supported this product launch better than any other national retailer.
Woolworths is also supporting smaller companies, such as 5:am organic yoghurt which has seen $6.5m in new sales since launch at Woolworths. They are now signing a contract to partner with Macro.
Macro is a key brand. There are four components - Organic, Natural, Free Range and Dietary Needs. Macro is the fastest growing brand, particularly the poultry range.
The Woolworths Select brand is also performing strongly. One example is the frozen pizza category, which was experiencing negative growth. Since the new Select pizza range was launched, the category is now performing positively.
Also of note is the launch of Marine Stewardship Council (MSC) certified sustainable seafood, which was met with applause at the presentation to investors.
Woolworths is continuing to tailor the shopping experience to suit the customer through multi-channel retailing. 1.5m customers have downloaded the mobile app, and 500k have upgraded to the latest version in the last 2 weeks. A "Click and Collect" (similar to Dick Smith) has commenced and virtual shopping has been trialled in Sydney and Melbourne.
