Supermarkets drive sales at Woolworths

Supermarket giant, Woolworths Limited (ASX: WOW) has reported a $1.15 billion profit for the six months to December 2012, a 19% rise over the previous period.

Australian Food and Liquor sales rose 4.7% to more than $20.4 billion, while New Zealand Supermarkets produced a 3.1% rise in revenues to $2.3 billion. Big W also posted strong growth, with revenues rising 3.6%. The Hotels and Home Improvement divisions recorded big jumps in revenues – up by 19.3% and 54.6% respectively.

All up, sales from continuing operations reached $30 billion, following the sale of the Dick Smith consumer electronics division last year. A fully franked dividend of 62 cents a share was declared, up 5.1% over the previous year.

The company announced that it was gaining market share, perhaps at the expense of Coles – owned by Wesfarmers Limited (ASX: WES), or IGA supermarkets, supplied by Metcash Limited (ASX: MTS).

This was a pleasing result, and Woolworths upgraded its full year growth estimates slightly from between 3-6% to 4-6%, on the back of strong results from all its sectors, despite challenging trading conditions in the Australian and New Zealand retail sectors.

Expansion into new ventures appears to be on the cards, with news out today that the company may be interested in buying into a Barossa Valley winery. That comes as the South Australian government is reportedly considering allowing limited wine sales in the state’s supermarkets.

Foolish takeaway

With plans to continue rolling out stores across all its divisions, strong cost control and ongoing improvements to its existing business, as well as potential moves into new areas, Woolworths looks well placed to generate earnings growth in the years ahead.

The Australian Financial Review says “good quality Australian shares that have a long history of paying dividends are a real alternative to a term deposit.” Get “3 Stocks for the Great Dividend Boom” in our special FREE report. Click here now to find out the names, stock symbols, and full research for our three favourite income ideas, all completely free!

More reading

The Motley Fool’s purpose is to help the world invest, better.  Click here now  for your free subscription to Take Stock, The Motley Fool’s free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead.  This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson. Motley Fool writer/analyst Mike King owns shares in Woolworths.

Two New Stock Picks Every Month!

Not to alarm you, but you’re about to miss a very important event! Chief Investment Advisor Scott Phillips and his team at Motley Fool Share Advisor are about to reveal their latest official stock recommendation. The premium “buy alert” will be unveiled to members and you can be among the first to act on the tip.

Don’t let this opportunity pass you by – this is your chance to get in early!

Simply enter your email now to find out how you can get instant access.

By clicking this button, you agree to our Terms of Service and Privacy Policy. We will use your email address only to keep you informed about updates to our website and about other products and services we think might interest you. You can unsubscribe from Take Stock at anytime. Please refer to our Financial Services Guide (FSG) for more information.