Woolworths, Australia’s largest supermarket chain, appointed a new chairman and posted annual results that matched analyst estimates as its key sales measure fell for the first time since at least 2005.
Net income was A$2.15 billion ($1.5 billion) in the 12 months ended 28 June, the Sydney-based company said Friday. That’s a drop of 13 per cent from the A$2.45 billion result a year earlier, and marginally ahead of the A$2.13 billion average of seven analyst estimates compiled by Bloomberg.
Gordon Cairns, a former chairman of David Jones, will take over from Ralph Waters as chairman on 1 September. The company is renewing its management after chief executive officer Grant O’Brien announced his resignation in June and supermarkets head Tjeerd Jegen left in February.
While the result gives hope that Woolworths can use its market-leading position to fend off German discounter Aldi, it also marks the 22nd consecutive quarter where it’s failed to outperform Wesfarmers’s second-ranked Coles chain. Sales from Australian food and liquor stores open at least 12 months fell 0.9 per cent from a year earlier in the fourth quarter, the first decline in the measure since at least 2005 and trailing the 3.6 per cent growth pace reported by Coles last week.
“They’re in a holding pattern until they can address some of the big structural concerns,” Andrew McLennan, an analyst at Commonwealth Bank of Australia, said by phone from Sydney before the result. “It’s difficult to see a stable earnings outcome for Woolworths in the short term.”
Woolworths shares closed at A$27.05 in Sydney yesterday, marking a 12 per cent fall so far this year that’s trailed the 3.3 per cent decline in the S&P/ASX 200 index.
Bloomberg News, edited by ESM
