The Woolworths Group Ltd (ASX: WOW) share price will be one to watch this morning following the release of its full year results.
How did Woolworths perform in FY 2019?
In FY 2019 Woolworths posted sales from continuing operations of $59,994 million and normalised earnings before interest and tax (EBIT) from continuing operations of $2,724 million. This was a 3.4% and 5% increase, respectively, on the prior corresponding period. The normalised result adjusts its growth rate to reflect the 53rd week in FY 2019.
Normalised net profit after tax from continuing operations came in 7.2% higher year on year at $1,752 million, allowing the Woolworths board to increase its final dividend to 57 cents per share. This brought its full year dividend to 107 cents per share fully franked, which was a 9.7% increase on FY 2018's dividend.
What were the drivers of the result?
The Australian Food business achieved normalised EBIT growth of 3.8% to $1,857 million for the year. This was driven by a strong finish to the year, leading to full year comparable sales growth of 3.1%. Pleasingly, FY 2020 has started strongly despite the Little Shop 2 promotion by rival Coles Group Ltd (ASX: COL). Woolworths' Lion King promotion has helped drive comparable sales growth of 7.5% during the first eight weeks of the year.
The company's New Zealand Food business posted a 2.6% lift in normalised EBIT to $277 million. As with its Australian Food business, the NZ business had a strong finish to the year and achieved comparable sales growth of 3.6% during the second half.
Elsewhere, the Endeavour Drinks business posted a 9.7% decline in normalised EBIT to $474 million, the Hotels business posted a 0.5% decline in normalised EBIT to $261 million, and the BIG W business reported a loss before interest and tax of $85 million. The latter was an improvement on FY 2018's $110 million loss. Despite the improvement, management advised that it is "not satisfied with the rate of translation of sales growth into profit" but expects the previously announced store and DC closures to accelerate the path to profitability.
Looking ahead, CEO Brad Banducci, appeared cautiously optimistic on the company's prospects in FY 2020.
He said, "Sales momentum across the Group improved in the second half of F19 and we have carried this momentum into F20. However, the consumer environment remains uncertain with many of our customers experiencing cost of living pressures despite record low interest rates and recent tax stimulus, and input cost pressures remain for retailers and suppliers alike. Despite this, we are energised by the material opportunities we have across the Group to deliver value for both customers and shareholders in F20."
