Woolworths Limited (ASX: WOW) has released its sales results for the first-half of financial year (FY) 2014 and the numbers are impressive indeed. Group sales from continuing operations (excluding petrol) grew 5.8% to $28.2 billion. As outlined below, with the exception of General Merchandise all divisions produced pleasing results.
Supermarket Division
This all-important division encompasses Australian Food and Liquor and New Zealand Supermarkets and Petrol. The Australian Food and Liquor segment boosted sales by nearly $1 billion, or 4.8%, to $21.5 billion, with comparable store sales up 3.4%. Importantly, the Australian segment benefited from increased market share, customer numbers, basket size, items sold and sales per average square metre.
During the half, Woolworths opened 26 and closed three Australian supermarkets bringing the total to 920 stores. Six Dan Murphy's were also opened which brought their total to 181 stores. In the remaining six months of the financial year, management plans to open 14 (net) supermarkets and six more Dan Murphy's.
General Merchandise
If there was a negative to be found within an otherwise impressive group result it came from this division. Adjusting for timing issues related to the Big W annual Toy Sale, sales increased by 2%. Of more concern however were comparable store sale figures which showed a flat result after adjusting for the rationalisation program.
Hotels
One new hotel was opened during the half to bring the total number of venues to 327. Sales increased by 3.8% to $788 million, with comparable sales up 2.1%.
Home Improvement
While some observers have already declared Woolworths attempt to compete with the Wesfarmers Ltd (ASX: WES) owned Bunnings chain as destined to fail, given the depth of experience Woolworths has in retailing and that its joint venture partner is US home improvement giant Lowe's, it would appear far too early to write this growth initiative off.
Sales at Masters increased by 49.4% with seven new stores opened. There are now 38 Masters' stores operating.
Foolish takeaway
Despite its enormous size which would generally imply slow growth, Woolworths continues to grow at an impressive rate and create new growth channels. Home improvement is one of those channels but another is online. In calendar year 2013 online sales topped $1 billion and in the first half of FY 2014 online sales growth exceeded 40%. With results such as these it's easy to see why Woolworths is such a popular blue-chip stock to own.