- Australian food sales rise for first time since end of 2014
- CEO Brad Banducci says increase ‘isn’t flash in the pan’
Woolworths Ltd. shares jumped to a 10-month high in Sydney after the struggling supermarket chain finalized an exit from its home improvements business and said Australian food sales may be turning around.
The stock climbed 6.3 percent to A$25.75 at 12:10 p.m. local time, taking this year’s gain to 5.1 percent and swelling the company’s market value to A$32.9 billion ($25 billion).
While Woolworths reported its first annual loss since listing in 1993, new Chief Executive Officer Brad Banducci said there are early signs of a turnaround. Australian food sales -- the company’s biggest business -- rose 0.3 percent in the eight weeks ended Aug. 21, the first gain since the end of 2014.
“I don’t think it’s a flash in the pan,’’ Banducci said on a conference call with reporters. “I already start to feel we’re starting to get some consistency. That consistency has continued into the current week.”
Banducci, who took over in February, is overhauling the company by lowering grocery prices, cutting jobs and slowing the pace of store openings. Woolworths spent more than A$500 million in its last financial year lowering prices or absorbing cost increases.
Woolworths said late Wednesday it expects to salvage A$500 million from a failed home improvements venture with Lowe’s Cos. Woolworths accepted defeat earlier this year and booked a A$3 billion charge to write down the assets and exit stores.
‘Quite a Relief’
“It’s probably quite a relief for Woolworths to put this to bed,” said William O’Loughlin, an investment analyst at Rivkin Securities Pty in Sydney. “It’s always hard to pick the bottom but my feeling is that the worst is probably past.”
The net loss at Woolworths was A$1.23 billion in the year ended June 26, compared with a profit of A$2.15 billion a year earlier. The supermarket chain more than halved its dividend to 33 cents a share, the smallest payment to shareholders in a decade.