How did the Woolworths (ASX:WOW) share price perform last earnings season?

The Woolworths share price closed higher following 1H results in February, with the company delivering strong sales growth across all business segments.

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The Woolworths Group Ltd (ASX: WOW) share price has been trending strongly, marking an all-time record high of $44.06 on Friday 20 August.

The supermarket sector has likely benefited from recent lockdowns, driving an increase in in-house consumption.

According to the Australian Bureau of Statistics, the latest Australian retail turnover figures for June flag a 1.8% month-on-month decrease. Within those figures, food retailing rose 1.5%, supported by subgroups including supermarkets and grocery stores, other specialised food retailing, and liquor retailing.

A similar narrative occurred during the February earnings season, with localised COVID-19 outbreaks driving volatility in business.

Let’s take a look at how the Woolworths share price performed following its 1H FY21 results.

How did Woolworths perform in 1H FY21?

Following the release of its 1H FY21 results in February, the Woolworths share price closed 1.05% higher at $33.46.

The company delivered strong sales growth across all business segments – with the exception of hotels – with record Christmas trading. Highlights include:

  • Group sales up 10.6% to $35,845 million
  • eCommerce sales surging 77.9% to $2,937 million
  • Group earnings before interest and tax increased 10.5% to $2,092 million
  • Group net profit after tax up 15.9% to $1,135 million
  • Dividend per share increasing 15.2% to 53 cents per share

Management flagged a moderation in sales for the rest of the financial year, saying, “we expect sales to decline over the March to June period compared to the prior year in all our businesses.”

“However, in parallel, we also expect COVID-related costs to be materially below the prior year, subject to no further widespread prolonged lockdowns.”

The topic of moderating sales would emerge in Woolies third-quarter update on 29 April, where the company flagged a 0.4% increase in group sales to $16,566 million. The Woolworths share price would tumble 3.86% to $33.72 on the day of the announcement.

Woolworths share price snapshot

The Woolworths share price has rallied 22.1% year to date.

Shares in the supermarket giant have performed strongly following the $10 billion demerger of its Endeavour drinks business in June.

The demerger will return $1.6 billion to $2 billion in cash to Woolworths shareholders via dividends. This could be something to keep an eye out for in the company’s upcoming FY21 result.

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Motley Fool contributor Kerry Sun has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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