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Record interim losses prompts denial of sale at Woolworths

Published: 17 September 2008
Chairman maintains the retail business is not for sale but is open to suggestions about its future.
Record interim losses prompts denial of sale at Woolworths
Woolworths' chairman Richard North has denied the retail arm of the group is for sale – even though he said he is open to suggestions about its future.

The comment was prompted by press questions following the release of Woolworths' interim results – the group reported record losses for the 26 weeks ended August 2, 2008.

The adjusted loss, excluding profits from property transactions, increased from £64.3m to £90.8m. Group sales for the half-year were down by 3% to £1,107.0m.

The operating review showed the Entertainment Wholesale and Publishing businesses delivered steady performances, however the group's overall results were hampered by the retail business.

Retail sales for the first half were £660.7m compared with £695.6m in the first half of 2007/8, a decline of 5.0% (3.2% on a like-for-like basis).

The declines stemmed from reduced sales across many categories, Woolworths said.

However Richard North said: "The board believes that these problems can be addressed, but a full and permanent resolution will take some time to achieve."

The work to tackle the 'operational, strategic and cultural issues' that are driving many of the problems is already well advanced, he said.

Recently appointed chief executive Steve Johnson will concentrate on value, availability and service, 'alongside a ruthless drive for business simplification'.

Back to basics

Small and medium sized stores will now be the engine of growth as they achieve high levels of profitability whilst opportunities to trade or reposition the larger stores will be reviewed.

"Operationally, our imperative is to return to the retailing basics of our business," the chairman said. "Product availability needs urgently to be improved, initially through focusing on our top selling lines, with appropriate product and price repositioning to ensure that customers can see a clear value proposition."

Costs will be addressed with reorganisation in the supply chain and at head office.

Steve Johnson said:"Right now, this business does not require lots of new strategic initiatives, it requires a good dose of basic shop keeping and attention to the detail of retailing."

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