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WOOLWORTHS GROUP LIMITED Annual Report 2011

Jul 19, 2011

66075_rns_2011-07-19_76173d30-9d44-4945-b152-d419aefaba1d.pdf

Annual Report

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20 July 2011

The Manager Companies Australian Securities Exchange Limited Company Announcements Office Level 4 20 Bridge Street SYDNEY NSW 2000

Dear Sir/Madam

RE: Woolworths Limited – Listing Rule 3.1

Please find following the Fourth Quarter Sales Results for the 52 week period ended 26 June, 2011.

For and on behalf of WOOLWORTHS LIMITED

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PETER J HORTON Group General Counsel and Company Secretary

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PRESS RELEASE

20 July 2011

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FULL YEAR SALES RESULTS 52 WEEKS TO 26[th] JUNE 2011

SALES OF $54.1 BILLION FOR THE YEAR UP 4.7% EXCLUDING PETROL SALES UP 4.1%

2010
Statutory
(52 weeks)
2011
Statutory
(52 weeks)
Increase
(%)
Full Year by Division
($ millions)
Supermarket Division
44,287
46,312
4.6%
Australian Food and Liquor
34,675
36,176
4.3%
New Zealand Supermarkets (NZD)
5,185
5,362
3.4%
New Zealand Supermarkets (AUD)
4,131
4,111
(0.5)%
Petrol (dollars)
5,481
6,025
9.9%
Petrol (litres)
4,792
4,920
2.7%
General Merchandise Division
5,975
6,014
0.7%
BIG W
4,193
4,158
(0.8)%
Consumer Electronics – Total
1,782
1,856
4.2%
Consumer Electronics – Aust
1,260
1,286
2.1%
Consumer Electronics – NZ (NZD)
341
322
(5.6)%
Consumer Electronics – NZ (AUD)
270
248
(8.1)%
Consumer Electronics – India
252
322
27.8%
Hotels
1,102
1,153
4.6%
Home Improvement
330
664
n.m
Total Year to Date Sales
Total Year to Dates Sales (excluding NZ
exchange rate impacts)
51,694
54,143
4.7%
5.1%
Total Year to Date Sales (excluding Petrol)
46,213
48,118
4.1%

Woolworths Limited Chief Executive Officer, Michael Luscombe, today announced full year sales of $54.1 billion, a $2.4 billion or 4.7% increase on the previous year (4.1% increase excluding Petrol).

Mr Luscombe said “This result has been achieved in a very challenging year for retail which saw continuing deflationary effects, the disruption caused by natural disasters, increased consumer caution and higher domestic savings rates. This outcome reflects our ability to adapt and perform in all economic environments.”

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1

SUPERMARKET DIVISION

Australian Food and Liquor

Australian Food and Liquor sales for the year were $36.2 billion, an increase of $1.5 billion or 4.3% over last year with comparable sales for the year increasing by 3.0%. During the fourth quarter, sales from the Australian Food and Liquor division increased by 6.0% (5.3% Easter adjusted[1] ). Comparable sales for the fourth quarter increased by 4.0% (3.3% Easter adjusted[1] ).

In a highly competitive and challenging retail environment, we have increased our market share, customer numbers, basket size and items sold in the year. A number of initiatives have contributed to this result including customer acceptance of the new 2015 store format and overall price competitiveness with our price knockdown campaign. In addition, customers continue to respond positively to the quality and value of our fresh food as demonstrated via initiatives such as a major price reduction on beef, the promotion of our Fresh Food Guarantee, the exciting expansion of our Macro Wholefoods Market organic and gluten free range and continued development of our Select and Homebrand products.

Trading does however continue to be impacted by tightened consumer spending with higher savings rates and higher interest rates, petrol and utility prices.

The standard shelf price movement index[2] for the year was 2.6% (fourth quarter 3.1%). Excluding the impact of the increased tobacco excise, the shelf price movement index for the year was 1.1% (fourth quarter 2.5%). These numbers are reflecting the higher levels of inflation in produce which were more than the offsetting deflation in some other categories.

Our average prices have experienced deflation for the second half of 3.6% excluding tobacco (first half 4.3%), or 3.3% deflation including tobacco (first half 3.8%), when the effects of the promotions and volumes are included. Part of this deflation has been a result of Woolworths lowering its prices for the benefit of customers in a dynamic market.

Australian Food and Liquor sales growth summary:

2011 2011 2010 2010
Total Comparable Total Comparable
Q1 3.2% 2.0% 7.8% 5.8%
Q2 3.7% 2.5% 5.9% 3.8%
Q3 4.6% 3.3% 3.8% 2.0%
Q3 Adj1 5.2% 3.9% 3.3% 1.6%
Q4 6.0% 4.0% 2.8% 1.3%
Q4 Adj1 5.3% 3.3% 3.4% 1.8%
Year 4.3% 3.0% 5.1% 3.3%

1 Adjusted for the impact of Easter. In 2011 Easter was in the fourth quarter. In 2010 the first week of Easter was in the third quarter and the second week in the fourth quarter.

2 The shelf price movement index is calculated by comparing the number of products sold in the current year using the current year prices to the number of products sold in the current year using the prior year prices. The price used for this comparison is the standard shelf price. Products on promotion are excluded from the calculation (i.e. the volume of these items sold is removed from both years’ sales). The calculation removes the impact of any changes in volumes, and the distortion of promotional activity.

2

SUPERMARKET DIVISION (continued)

We opened 21 new Australian Supermarkets during the year, within our targeted range of 15 to 25, with seven opening in the fourth quarter of 2011, bringing total Australian Supermarkets to 840 stores. We also opened 19 new Dan Murphy’s stores during the year taking the total number of stores to 140.

Total Liquor sales for the year were $5.9 billion[3] (FY10: $5.6 billion).

The total trading area for the Australian Supermarkets Division increased by 3.5% (FY10: 4.4%) for the year.

New Zealand Supermarkets

New Zealand Supermarkets sales for the year were NZ $5.4 billion (A$4.1 billion), a 3.4% increase (in NZD) over last year with comparable sales for the year increased by 3.7%. Stores closed due to the Christchurch earthquake and the petrol sites transferred back to Gull have been excluded from comparable sales. During the fourth quarter, New Zealand Supermarkets sales increased by 2.4% (in NZD) (2.5% Easter adjusted[4] ). Comparable sales for the fourth quarter increased 5.0% (5.2% Easter adjusted[4] ).

We have grown market share, customer numbers, basket size and items sold in the year in an environment where the New Zealand economy remains challenging for retailers, particularly following the most recent Christchurch earthquake. Two earthquake damaged Countdown stores and one franchise store remain closed. Whilst customers have continued to shop at our other nearby stores, sales for the year have been adversely impacted.

In New Zealand, the overall food inflation for the year was 1.4% (fourth quarter 2.5%) an increase from 0.9% in the previous year (fourth quarter deflation of 1.4%).

New Zealand Supermarkets sales growth summary:

NZD 2011 2011 2010 2010
Total5 Comparable5 Total5 Comparable5
Q1 4.7% 4.5% 4.8% 4.5%
Q2 3.5% 2.6% 4.1% 3.9%
Q3 3.0% 3.0% 4.1% 3.4%
Q3 Adj4 2.9% 2.8% 4.4% 3.6%
Q4 2.4% 5.0% 5.4% 4.4%
Q4 Adj4 2.5% 5.2% 5.2% 4.1%
Year 3.4% 3.7% 4.6% 4.0%

3 Liquor sales include sales from Supermarkets attached liquor, BWS, Dan Murphy’s, ALH bar sales, Langtons and Cellarmasters from May 2011.

4 Adjusted for the impact of Easter. In 2011 Easter was in the fourth quarter. In 2010 the first week of Easter was in the third quarter and the second week in the fourth quarter.

5 Total and comparable sales % quoted based on NZD sales.

3

SUPERMARKET DIVISION (continued)

We opened 10 Countdown stores during the year. During the fourth quarter, two stores were opened and two stores damaged by the earthquake were reopened. At year end there were 156 New Zealand Supermarkets (excluding franchisees and excluding the two stores that remain closed since the February and June Christchurch earthquakes).

Petrol

Petrol sales for the full year were $6.0 billion, an increase of 9.9%. Petrol comparable sales (dollars) increased by 7.2%, with comparable volumes increasing by 0.2% over the year.

National average fuel prices were 131.2 cpl for the year, up from 124.1 cpl last year.

Merchandise (non fuel) sales for the year increased by 10.2% (comparable 5.5%) reflecting the continued merchandising improvements and growth of our share of the convenience market.

Petrol sales for the fourth quarter, including Woolworths/Caltex Alliance sites, increased by 14.9% (14.9% Easter adjusted[6] ), reflecting an increase in the average selling price of petrol compared to last year. Petrol comparable sales (dollars) increased by 11.6% (11.6% Easter adjusted[6] ), during the quarter. Total volumes in the fourth quarter increased by 2.8% (3.0% Easter adjusted[6] ), with comparable volumes decreasing 0.1% (flat Easter adjusted[6] ). Seven new petrol sites opened in the quarter.

As at the end of the financial year, we had 581 petrol stations including 132 Woolworths/Caltex alliance sites. We opened an additional 20 petrol canopies during the year.

Petrol sales growth summary:

2011 2011 2010 2010
Total
Dollars
Comparable
Dollars

Total
Volumes
Comparable
Volumes

Total
Dollars
Comparable
Dollars
Total
Volumes
Comparable
Volumes
Q1 3.3% 0.9% 1.4% (0.9)% (16.4)% (18.1)% 3.6% 1.6%
Q2 8.7% 6.4% 3.1% 1.1% (0.6)% (2.4)% 2.0% 0.2%
Q3 13.3% 10.4% 3.4% 0.7% 12.5% 10.6% 2.5% 0.9%
Q3 Adj6 13.3% 10.4% 3.2% 0.6% 12.5% 10.6% 2.5% 0.9%
Q4 14.9% 11.6% 2.8% (0.1)% 11.5% 9.5% 2.0% 0.2%
Q4 Adj6 14.9% 11.6% 3.0% flat 11.5% 9.5% 1.9% 0.2%
Year 9.9% 7.2% 2.7% 0.2% flat (1.7)% 2.5% 0.7%

6 Adjusted for the impact of Easter. In 2011 Easter was in the fourth quarter. In 2010 the first week of Easter was in the third quarter and the second week in the fourth quarter.

4

BIG W

Sales for the full year were $4.2 billion, a decrease of 0.8% over the previous year. Comparable sales for the full year declined 2.5% (FY10: 3.2% decrease).

BIG W sales trends are encouraging and show an improved second half sales result with total sales growth of 2.0% and flat comparable sales. This compares to a 2.8% total sales decrease for the first half of this year and decrease of 7.0% in the second half of the prior year. The result reflects the contribution of ten new stores opened over the last two years, strong results from our Toy, Menswear and Home departments and the continued growth of our optical and online offers.

During the year, customer numbers and units continued to grow strongly and each customer is purchasing more items in each basket. These results are achieved by offering the lowest prices on the widest range of quality and branded merchandise everyday.

Deflation has continued in the current quarter, albeit at slightly lower levels of 4% to 7% as we have cycled the introduction of the lower import tariffs on 1 January 2010. Deflation for the year was 6% to 9%. The primary cause of the price deflation has been the stronger Australian dollar with cost price reductions passed on to customers.

BIG W total sales increased 5.0% for the fourth quarter (2.0% Easter adjusted[7] ) (Q4 10: 10.5% decrease) and comparable sales increased 2.8% (flat Easter adjusted[7] ) (Q4 10 : 11.4% decrease).

BIG W sales growth summary:

2011 2011 2010 2010
Total Comparable Total Comparable
Q1 (2.7)% (3.9)% 5.8% 3.9%
Q2 (2.9)% (4.5)% (0.3)% (2.1)%
Q3 (0.5)% (2.7)% (3.7)% (4.7)%
Q3 Adj7 2.0% flat (4.8)% (5.8)%
Q4 5.0% 2.8% (10.5)% (11.4)%
Q4 Adj7 2.0% flat (9.3)% (10.2)%
Year (0.8)% (2.5)% (1.7)% (3.2)%

There were four new BIG W stores opened during the year taking total stores to 165.

7 Adjusted for the impact of Easter. In 2011 Easter was in the fourth quarter. In 2010 the first week of Easter was in the third quarter and the second week in the fourth quarter.

5

CONSUMER ELECTRONICS

Total Consumer Electronics sales grew by 4.2% over the previous year.

Consumer Electronics Australia

Sales for the full year were $1.3 billion, a 2.1% increase on previous year, with comparable store sales increasing by 4.2%.

We have increased comparable customer numbers and average basket size. Consumer Electronics continues to be impacted by tightened consumer spending in Australia and significant price deflation in key products which has been intensified by the strong Australian dollar. The new format stores in Australia, which have now reached 68% of the total store network, are outperforming older format stores.

The comparable store sales for the full year for our Australian Dick Smith stores (excluding Tandy and ex Powerhouse stores) grew 7.1%. This result reflects the continued roll out of our new refreshed Dick Smith offer which has driven market share growth in key categories. The new format Dick Smith stores continue to grow sales at a greater rate than the older format stores.

Fourth quarter sales for Australia decreased 4.1% on prior year (decreased 3.0% Easter adjusted[8] ). Comparable sales decreased 1.2% (decreased 0.1% Easter adjusted[8] ) (increased 2.6% or 3.7% Easter adjusted[8 ] for the Dick Smith stores – excluding Tandy and ex Powerhouse).

Dick Smith Australia sales growth summary:

2011 2011 2010 2010
Total Comparable Total Comparable
Q1 0.9% 3.3% 9.3% 6.5%
Q2 3.4% 4.8% 0.3% 0.6%
Q3 7.5% 9.4% (3.8)% (2.6)%
Q3 Adj8 6.4% 8.3% (2.4)% (1.2)%
Q4 (4.1)% (1.2)% flat 2.2%
Q4 Adj8 (3.0)% (0.1)% (1.5)% 0.6%
Year 2.1% 4.2% 1.4% 1.6%

8 Adjusted for the impact of Easter. In 2011 Easter was in the fourth quarter. In 2010 the first week of Easter was in the third quarter and the second week in the fourth quarter.

6

CONSUMER ELECTRONICS (continued)

Consumer Electronics New Zealand

Dick Smith New Zealand continues to face a very challenging macroeconomic environment and significant price deflation in key categories. Full year comparable store sales declined 4.7% (in NZD).

Fourth quarter sales for New Zealand decreased 6.8% (in NZD) on the prior year (decreased 5.6% Easter adjusted[9] ). Comparable sales decreased 3.3% for the quarter (decreased 2.5% Easter adjusted[9] ).

Dick Smith New Zealand sales growth summary:

NZD 2011 2011 2010 2010
Total10 Comparable10 Total10 Comparable10
Q1 (2.3)% (4.2)% 3.6% (7.0)%
Q2 (5.9)% (5.7)% (6.5)% (11.8)%
Q3 (7.4)% (5.1)% (12.9)% (17.6)%
Q3 Adj9 (8.5)% (5.7)% (12.0)% (17.5)%
Q4 **(6.8)% ** **(3.3)% ** (6.4)% (10.8)%
Q4 Adj9 (5.6)% (2.5)% (7.6)% (11.0)%
Year (5.6)% (4.7)% (5.8)% (12.1)%

There were 47 Dick Smith stores opened during the year (41 in Australia, six in New Zealand), 56 Dick Smith and 13 Tandy stores were closed during the year and five Tandy stores have been rebranded as Dick Smith, taking total stores to 394 (390 Dick Smith and four Tandy). Three of the store closures were as a result of the New Zealand earthquake.

India

Our business venture with TATA in India now services 64 retail stores operating under the Croma brand and has produced sales of $322 million for the year compared to $252 million last year, an increase of 27.8%. As part of this venture Woolworths Limited provides buying, wholesale, supply chain and general consulting services to TATA.

9 Adjusted for the impact of Easter. In 2011 Easter was in the fourth quarter. In 2010 the first week of Easter was in the third quarter and the second week in the fourth quarter.

10 Total and comparable sales % quoted based on NZD sales.

7

HOTELS

Hotel sales of $1.2 billion for the year represent an increase of 4.6% with comparable sales increasing 4.9%. This result reflects a continued focus on improving the food and entertainment offers and the passing of the anniversary of some regulatory changes in Victoria. Comparable gaming sales for the year increased 3.1%.

Hotel sales in the fourth quarter increased by 4.9% to $259 million (5.3% Easter adjusted[11] ). Comparable sales for the quarter increased by 5.1% (5.7% Easter adjusted[11] ). Gaming comparable sales increased by 2.2% in the quarter (2.3% Easter adjusted[ 11] ).

A further two properties were added to the portfolio and four were closed during the year (including one temporarily closed for renovation), taking total venues to 282.

Hotels sales growth summary:

2011 2010
Total Comparable Comparable
Gaming
Total Comparable Comparable
Gaming
Q1 2.6% 1.8% 1.7% 1.0% (1.2)% (1.4)%
Q2 4.5% 5.0% 3.0% (1.4)% (4.0)% (6.3)%
Q3 6.8% 8.1% 6.0% (1.1)% (3.7)% (4.1)%
Q3 Adj11 6.4% 7.5% 5.9% (0.3)% (2.7)% (2.9)%
Q4 4.9% **5.1% ** 2.2% (1.6)% (3.6)% (3.2)%
Q4 Adj11 5.3% 5.7% 2.3% (2.8)% (4.7)% (4.5)%
Year 4.6% 4.9% 3.1% (0.7)% (3.0)% (3.7)%

ONLINE SALES

Woolworths has made substantial progress in delivering a multi channel experience across all our brands resulting in multi channel online sales increasing 63% for the year. This result reflects the success of the BIG W online store launched in May 2010, the refreshed Dick Smith online store as well as the expansion of Woolworths online into new metropolitan and regional areas. A new Dan Murphy’s online store was launched in March 2011 and has been positively received by customers, delivering incremental sales both online and in stores.

For further information contact:

Clare Buchanan (02) 8885 1032 – Media Tom Pockett (Finance Director) (02) 8885 1105 – Investors/Analysts

11 Adjusted for the impact of Easter. In 2011 Easter was in the fourth quarter. In 2010 the first week of Easter was in the third quarter and the second week in the fourth quarter.

8

Appendix 1 2010 2011 Statutory Proforma12
Statutory Statutory Increase Increase
12 weeks 12 weeks (%) (%)
Fourth Quarter by Division
($ millions)
Supermarket Division 10,013 10,645 6.3% 5.8%
Australian Food and Liquor 7,779 8,247 6.0% 5.3%
New Zealand Supermarkets (NZD) 1,181 1,209 2.4% 2.5%
New Zealand Supermarkets (AUD) 937 908 (3.1)% (3.0)%
Petrol (dollars) 1,297 1,490 14.9% 14.9%
Petrol (litres) 1,098 1,129 2.8% 3.0%
General Merchandise Division 1,203 1,229 2.2% 0.5%
BIG W 808 848 5.0% 2.0%
Consumer Electronics – Total 395 381 (3.5)% (2.8)%
Consumer Electronics – Aust 270 259 (4.1)% (3.0)%
Consumer Electronics – NZ (NZD) 73 68 (6.8)% (5.6)%
Consumer Electronics – NZ (AUD) 56 50 (10.7)% (10.7)%
Consumer Electronics – India 69 72 4.3% 4.3%
Hotels 247 259 4.9% 5.3%
Home Improvement 122 147 20.5% 20.5%
Total Fourth Quarter Sales 11,585 12,280 6.0% 5.4%
Total Fourth Quarter Sales (excluding Petrol) 10,288 10,790 4.9% 4.2%
Periods ($ millions)
Quarter 1 (14 weeks) 13,367 13,910 4.1% 4.1%
Quarter 2 (13 weeks) 13,836 14,393 4.0% 4.0%
First Half (27 weeks) 27,203 28,303 4.0% 4.0%
Quarter 3 (13 weeks) 12,906 13,560 5.1% 5.6%
Quarter 4 (12 weeks) 11,585 12,280 6.0% 5.4%
Second Half (25 weeks) 24,491 25,840 5.5% 5.5%
Total Full Year Sales 51,694 54,143 4.7% 4.7%
Group Excluding Petrol
Quarter 1 (14 weeks) 11,927 12,422 4.2% 4.2%
Quarter 2 (13 weeks) 12,495 12,936 3.5% 3.5%
First Half (27 weeks) 24,422 25,358 3.8% 3.8%
Quarter 3 (13 weeks) 11,503 11,970 4.1% 4.7%
Quarter 4 (12 weeks) 10,288 10,790 4.9% 4.2%
Second Half (25 weeks) 21,791 22,760 4.4% 4.4%
Total Group Sales Excluding Petrol Full Year Sales 46,213 48,118 4.1% 4.1%

12 Adjusted for the impact of Easter. In 2011 Easter was in the fourth quarter. In 2010 the first week of Easter was in the third quarter and the second week in the fourth quarter.

9

Appendix 2: New stores and refurbishments

Fourth Quarter
Australian Supermarkets
Thomas Dux
Liquor
New Zealand Supermarkets
Petrol
BIG W
Consumer Electronics – Aust / NZ
Hotels
Danks (Home Improvement Retail)
Total Fourth Quarter
Full Year
Australian Supermarkets
Thomas Dux
Liquor
New Zealand Supermarkets
Petrol
BIG W
Consumer Electronics – Aust / NZ
Hotels
Danks (Home Improvement Retail)
Total Full Year
New Stores13
Refurbishments
7
25
-
-
16
18
2
7
7
-
-
2
9
24
-
5
-
-
41
81
New Stores13
Refurbishments
21
78
-
-
65
45
10
20
20
-
4
11
47
45
2
34
9
-
178
233

13 Reflects gross store openings

10

Appendix 3

ppendix 3
Five Year Store and Trading Area Analysis
Year Ended 26 June 2011 2011 2010 2009 2008 2007
FULL FULL FULL FULL FULL
YEAR YEAR YEAR YEAR YEAR
STORES (number)
NSW & ACT 255 248 241 234 237
QLD 194 189 186 177 168
VIC 203 200 192 187 183
SA & NT 76 74 72 72 72
WA 83 83 82 81 79
TAS 29 29 29 29 27
Supermarkets in Australia14 840 823 802 780 766
New Zealand Supermarkets15 156 152 149 149 149
Total Supermarkets 996 975 951 929 915
Thomas Dux 11 11 3 1 -
Freestanding Liquor (incl. Dan Murphy) 305 281 256 233 212
ALH Retail Liquor Outlets 488 480 463 434 424
Caltex/WOW Petrol 132 132 133 133 134
Woolworths Petrol – Australia 449 429 409 389 371
Woolworths Petrol/Convenience – New Zealand
-
22 22 22 22
Total Supermarket Division **2,381 ** 2,330 **2,237 ** 2,141 2,078
BIG W 165 161 156 151 142
Dick Smith 390 394 349 310 277
Tandy 4 22 87 106 123
Total General Merchandise Division 559 577 592 567 542
Hotels (includes 8 clubs) 282 284 280 271 263
Danks (Home Improvement Retail) 19 8 - - -
Total Group 3,241 3,199 3,109 2,979 2,883
Wholesale customer stores
Dick Smith 3 18 35 43 55
Progressive 51 54 53 52 50
Croma (India CEG) 64 50 33 22 5
Danks (Home Improvement Wholesale) 543 581 - - -
Statewide Independent Wholesale 220 220 218 216 217
Total Wholesale customer stores **881 ** 923 339 333 327
Trading Area (sqm)
Supermarkets Division – Australia16 2,202,620 2,127,195 2,037,680 1,945,641 1,848,792
Supermarkets Division – New Zealand17 333,274 325,256 303,889 296,549 291,092
General Merchandise Division18 1,086,082 1,061,934 1,038,561 989,767 930,288
Store Movements July 10 - June 11 14Australian Supermarkets 15New Zealand Supermarkets
New Stores – incremental 21 10
Closures – permanent (3) (1)
Net Closures – re-development (1) (3)
Temporary Closures – natural disasters - (2)
Net New Stores 17 4
16Australian Supermarkets Division trading area (excluding Petrol and ALH BWS outlets) has
increased by: 3.5% FY10: 4.4%
17Excludes Gull and franchise stores
18Excludes Woolworths India

11