Woolworths Ltd. Continues to Grow
Woolworths Ltd. seems to rule the roost. Whether supermarkets, liquor, consumer electronics, hotels, general merchandise and financial services, the company is the king everywhere. Its earnings grew 11.4% to $1.683 billion.
Australia's biggest grocer's decision to reduce prices was seen aggressively by the critics who believe it was igniting a price war. But the company refused to admit that it is giving rise to a price war.
The company plans to reinvest in the retail loop by taking its prices down.
There would also be a drop in all imported products.
However, food inflation had grown in Australia during December 2009 quarter in spite of Woolworth lowering its prices. But cost efficiency is anticipated in the latter part of this year. Interim revenue of Woolworth rose 4.2% to $27.2 billion, and earnings per share increased 10% to 89.1 cents. The revenue mainly came from the food and liquor divisions in line with expectations. This is a clear example of the company's success.
Woolworths' decision to launch a $400 million on-market share buyback soared its share price $1.39, or 5.46%, higher to $26.84.
Woolworths has several plans in the pipeline. It has already announced 12 locations including Coolaroo, Burnside, Preston, Hawthorn East, Oakleigh South, South Morang, Mornington, Wendouree, Geelong, Bendigo, Knoxfield and Carrum Downs. These locations will be used for the company's hardware and home improvement.
It also plans to explore other sites in Victoria for expansion and open another 18 stores in the coming 5 years.
Whatever the critics say, Woolworth's financial performance is very impressive and its food and liquor businesses will continue to remain in line with analysts' expectations and keep getting A3 ratings.