Endeavour Drinks Group sales up 4%

Woolworths' liquor division, Endeavour Drinks Group, has recorded another winning result in the retailer's latest half-year results. 

According to the Australian Financial Review, margins were reduced by "higher staff bonuses", but the EBIT still rose 3.1% to $302.3million. Sales rose 4% to $4.3billion, with comparable sales up 2.4%.

Woolworths CEO Brad Banducci put the result down to "good cost control, despite the price investment". 

He noted the Dan Murphy’s digital operation had a particularly strong half, while BWS performed well with its '100 Days of Summer’ promotion. The launch of the click and collect service across its 815 BWS stores also contributed to sales growth.

Meanwhile, there was also “strong double-digit sales growth from Summergate Fine Wines and Spirits” - a great result for Managing Director Rose Scott, who took the role in September, 2016. Scott has been with Endeavour Drinks Group since 2013.

Endeavour said it plans to “continue to drive growth ahead of the market” and that there will be “continued investment in customer experience across all businesses”. The division will open 27 new stores,13 Dan Murphy’s and 14 BWS stores. 

It also plans to "reinvigorate" its Direct to Consumer businesses - Cellarmasters and NZ Wine Society - and "continue to build Pinnacle Drinks with compelling brands".

Supermarket sales less effervescent

It was a more mix result in supermarket sales. Woolworths' $1billion investment into prices and service has come at a cost to shareholders: the company cut its interim dividend by 10¢ a share to 34¢ after net profits fell 16.7% to $785.7 million in the December-half.

Group earnings before interest and tax were down 14.5% to $1.3 billion, mostly due to a 14% drop in earnings from Australian supermarkets to $811.6 million.

However, Woolworths finally stole Coles' sales growth crown. Coles posted like-for-like sales growth of 1% for the quarter, while Woolworths reported a 3.1% improvement. It is the first time in 30 quarters that Woolworths had outperformed Coles on this measure.

However, margins hit to the lowest level since 2004 and dividends were cut by another $42million after being reduced by almost $90million in 2016.

“While we expect trading conditions to remain competitive for the remainder of FY17, we are focused on building the sales momentum we have achieved over the last six months as we work to restore sustainable growth in Australian Food,” Banducci said.

“We note, however, that the second half will also be a period of continued investment in improving the store experience, depreciation from our renewal and IT investments and higher team incentive payments.”