Woolworths sees flat FY earnings

Woolworths says trading so far in the June quarter has continued to be strong with food sales in Australia up 8.6 per cent, and in New Zealand up 15.1 per cent.

Sales at Big W jumped 27.8 per cent in the 10 weeks to June 14, while its Endeavour drinks business saw a 21.4 per cent growth for the same period.

By comparison, sales had grown in the low single digits during the first half in all four segments. 

The retail giant said it expects full year earnings before interest and tax to be in the range of $3.2 billion to $3.25 billion, compared to $3.29 billion for a 53-week period last year.

However, earnings for its Hotels business, which has been hit because of venue closures, will be between $160 million and $170 million, down from $355 million last year.

Woolworths will report full year results on August 27.

The company on Tuesday also announced plans to develop an automated regional distribution centre and a semi-automated national distribution centre at Moorebank Logistics Park in Sydney.

The facilities will replace the current grocery operations at the Sydney Regional Distribution Centre at Minchinbury, Sydney National Distribution Centre at Yennora and Melbourne National Distribution Centre at Mulgrave. 

Woolworths said it will invest $700 million to $780 million in technology and the fitout of the two distribution centres over the next four years and has signed an initial lease term of 20 years with Qube Holdings. 

The investment is expected to deliver a significant reduction in the group’s supply chain costs over time. 

It will result in a one-off pre-tax cost of $176 million in the FY20 accounts.  

In addition, the group also outlined extra costs worth $179 million for the second half of the financial year on account of transformation costs for its Endeavour Drinks, which is being separated, and said remediation costs of staff underpayments have also gone up by $105 million to be booked in the second half.

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