Woolworths’ drinks business soars online

Internet Retailing

23rd Aug 2017

Reporting $1.53 billion in full-year profit and a 4.6 per cent lift in comparable food sales today, Woolworths bounced back from last year’s writedown-heavy $1.23 billion loss and outstripped Coles for a third consecutive quarter.

The company saw strong online growth in food sales and its drinks business, Endeavour Drinks, with Dan Murphy’s online channel up 25 per cent.

Overall, Endeavour Drinks delivered sales growth of 4.3 per cent with EBIT growth of 3.9 per cent.

In October 2016, Woolies launched BWS online with one hour click and collect available at all stores. It is currently trialling fast delivery in around 50 BWS stores.

Meanwhile, Woolies grew online sales of Australian food by 15.8 per cent in FY17 to $36.4 billion, with second half growth rising to 18.7 per cent.

Overall food sales increased by 4.5 per cent over the year with the fourth quarter the strongest at 7.2 per cent (Easter adjusted).

EBIT for the year declined by 2.4 per cent but increased by 13 per cent in the second half of FY17.

The company reported it has reached 10 million Woolworths Rewards members in the last week of the financial year, and 2.4 million My Dan Murphy’s members three years after launch.

In contrast to the Woolworths’ food and drink business, Big W performed poorly, with a pre-tax earnings loss of $150.5 million and another 5.8 per cent fall in sales.

According to Hianyang Chan, senior research analyst at Euromonitor International, the discount department store will need to improve its omnichannel offerings ahead of further threats from Amazon.

“The imminent entry of Amazon into Australia will post further threats to most major retailers and Big W will be no exception,” he said.

“It is expected that the parent company will aim to further strategise on how to better retain and expand their consumer base by better omni-channel offering, wider, better priced and a more localised product range, better customer service and most importantly, introducing a flexible, faster and cheaper same-day delivery service.”