Woolworth’s results show Cartology revenue up 11% post Shopper acquisition
Woolworths Group has reported its latest earnings for the six months ending 31 December 2021. The group revenue from sales of goods and services has increased by 4% to $33.1 billion.
Its profit for the period was $849 million after-tax, and the earnings before interest and tax (EBIT) was $1.5 billion, without Endeavour Group’s gain post the demerger last year.
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The group’s Australian food segment, which included retail stores and WooliesX e-commerce, posted total sales of $24.3 billion in the first half of 2023, up 2.5% year-on-year. The segment’s EBIT was $1.4 billion.
Under WooliesX’s $3 billion sales in the half year, Digital & Media platforms (ConnectedX, Cartology) and Rewards & Services (EverydayX) contributed $675 million, compared to the category’s $625 million sales in 2022, up 8% year-on-year.
Cartology’s network launched in Big W and Woolworths metro stores during this period. It expanded its offering with the acquisition of Shopper in October last year. Alongside an 80.2% stake in MyDeal.com.au, Woolworths Group gained control of both for $380 million.
Of the $162 million used to acquire Shopper, $159 million was used for initial consideration and $3 million was related to both working capital adjustments and an earn out arrangement as certain earning thresholds were achieved during the period.
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“The acquisition of Shopper supports the growth potential of Cartology, the group’s existing retail media business, as it offers targeted shopper advertising through a national screen network of more than 2,000 screens in over 400 shopping centres,” the report said.
“Despite a more challenging marketing investment environment, Cartology revenue increased by 11% compared to the prior year.”
Weekly users of the Woolworths app increased by 34% compared to the 2022 half-year, with 30% of e-commerce orders placed in-app.
The company announced an interim dividend for the 2023 financial period of 46 cents per share, fully franked at a 30% tax rate.
“In summary, we are pleased to report a very balanced Group result after an extended period of significant operational challenges and trading volatility. While EBIT growth rates compared to last year are inflated by the non-recurrence of COVID costs, our results were achieved through a focus on our customers and restoring the operating rhythm of our business,” said Woolworths Group CEO, Brad Banducci.
“At the same time, we were able to make progress on our longer-term agenda to position Woolworths Group for the future. The economic environment is likely to become more challenging over the next six to 12 months as cost of-living pressures persist and we continue to be focused on working hard on behalf of our customers to deliver value for money.”
After the demerger, Endeavour Group also launched its own retail media arm, MixIn by Endeavour.
Woolworths Group remained the most valuable Australian brand for the fourth consecutive year in the 2023 Brand Finance Australia 100 ranking.
Looking ahead, Banducci said: “We have had a strong start to H2 F23. While comparisons to the prior year are impacted by cycling last year’s Omicron outbreak, operating conditions have continued to stabilise and sales growth has been robust.
“In Australian food, sales growth has remained strong with Woolworths food retail total sales for the first seven weeks of H2 increasing by 6.5%. On a 3-yr CAGR, sales also increased by 6.5%. eCom sales trends have also improved with eCom sales up on the prior year.
“Inflation is continuing to affect the way that customers shop but the overall impact on our business at this stage remains modest. We remain focused on ensuring that our customers get their Woolies worth through our Prices Dropped and Low Price programs, various Specials, personalised Everyday Rewards offers, and ranges tailored to meet the needs of specific stores and communities.”
“In summary, sales momentum has continued to be solid in the half to date and the operating rhythm of our business continues to improve. However, EBIT growth in H2 will be below H1 as we cycle a more normal second half.
“We will continue to balance the needs of all our stakeholders, including providing our customers with great value; treating our suppliers fairly; offering competitive pay and a positive working environment for our team; continuing to play our part in creating a better tomorrow; and delivering sustainable financial results for our shareholders.”
Woolworths Group trades at $37.6 today, with a market capitalisation of $44.66 billion.
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