Investor Presentaiton
38
Business review
39
Annual Report 2023
Woolworths Group
Woolworths
New Zealand
Sales
$7,912M
4.6% from F22
EBIT
$249M
▼ 21.0% from F22
New Zealand
Food
The performance of New Zealand Food in F23 reflects
a more challenging operating environment. Despite
this, the business made good progress on laying the
foundations for the future.
FreshChoice and SuperValue sales increased by 0.8%,
with sales growth impacted by cycling COVID in the
prior year where sales benefitted from more customers
shopping locally. On a 4-yr CAGR, franchise store sales
have increased by 4.9%.
eCommerce sales declined 2.8% in F23 with penetration
decreasing 96 bps to 12.7% as customers returned to
in store shopping. On a 4-yr CAGR, eCommerce sales
have increased by 21.7% with penetration up 5.7 pts from
7.0% in F19. Online VOC NPS ended the year at 54, up four
points on Q3 and in line with the prior year. By the end
of F23, Drive solutions and eLockers had been rolled out
to 104 stores with Pick up at 42% of eCommerce sales.
Other digital highlights in F23 include strong growth
in Cartology, an increase in unique app users of 16.3%
and growth in Delivery Saver subscriptions, with 33,000
subscribers at the end of F23.
Sales per square metre increased by 1.8% reflecting
sales growth of 4.6%, offset by an increase in average
space of 2.7%. During the year three new stores and
one replacement store were opened, 12 renewals were
completed, two stores were permanently closed and
one replacement store was closed. At the end of the
year, the total store network of 263 stores comprised
191 Countdown stores, and 35 SuperValue and 37
FreshChoice franchise stores.
Gross margin (%) decreased by 9 bps in F23 to 23.1%.
In H1, gross margin was impacted by an increase in
costs primarily driven by freight, online delivery charges
and an increase in distribution centre costs, partly due
to the opening of the Auckland Fresh DC. Gross margin
in H2 increased by 26 bps to 23.4% driven by a focus on
promotional effectiveness, category mix benefits, and an
improvement in distribution centre cost management and
lower COVID costs. This was partially offset by stockloss.
CODB (%) increased by 94 bps primarily driven by higher
team member wages following the 12% increase in store
team wages in July 2022. H2 CODB (%) increased by 20bps
with productivity initiatives, lower COVID costs and stronger
ROFE
5.2%
1.8 pts from F22
Trading performance
New Zealand Food's customer metrics ended F23 up on the prior year despite
a dip in Q3 due to adverse weather events affecting availability, and the impact
of market-wide inflation and cost-of-living pressures on value perception.
A recovery in availability as H2 progressed led to the highest Availability
score since July 2021 with improvements in the customer experience also
contributing. VOC NPS (Store and Online) increased two points on Q3 and the
prior year to 39. Store-controllable VOC increased three points on Q3, and one
point compared to the prior year.
New Zealand Food's total sales increased by 4.6% in F23 to $7,912 million
(4-yr CAGR: 4.8%). H1 total sales increased 1.3% despite cycling elevated sales
driven by COVID lockdowns in the prior period with a decline in items offset by
higher inflation. In H2, sales increased by 8.4% with Q4 total sales increasing
by 8.3% (comparable sales: 7.2%). Item declines during the half were more than
offset by inflation with item declines moderating in Q4 as availability began
to improve. Average prices in Q4 increased by 9.2% compared to Q4 F22,
a small reduction on the 9.5% increase in Q3.
$ MILLION (NZD)
EBIT to sales (%)
F23
Total sales
7,912
EBITDA
572
7,563
611
F22 CHANGE
4.6%
(6.3)%
Depreciation and
amortisation
(323)
(295)
EBIT
249
316
Gross margin (%)
23.1
23.2
9.5%
(21.0)%
(9) bps
CODB (%)
20.0
19.0
94 bps
3.2
4.2 (102) bps
Sales per square metre ($)
18,208
Funds employed
ROFE (%)
4,745
5.2
17,881
4,635
7.0
Scope 1 & 2 emissions
(tonnes)
62,255
63,782
(2.4)%
1.8%
2.4%
(1.8) pts
Woolworths
Zedland
Transformation of
Woolworths New Zealand
In July 2023, Countdown announced its
plans for a multi-year transformation
program, reaffirming the Group's long-
term commitment to its New Zealand
customers. As part of the transformation,
Countdown will be rebranded to
Woolworths Supermarkets. The program
also includes a refreshed loyalty offer
through the roll out of Everyday Rewards
in early 2024, investment in the store
network, and a materially improved
fresh offer to create better experiences
for New Zealand customers and team.
The Bethlehem store in Tauranga was
the first to be rebranded in August 2023
sales momentum helping to partially offset the increase
in team wages. Other material cost increases included
a 9.5% increase in depreciation and amortisation arising
from investment in the store network, including spend
to facilitate eCommerce growth, investment in digital
capability and innovation, and supply chain transformation.
F23 EBIT declined 21.0% on the prior year to $249 million with
the EBIT margin down 102 bps to 3.2%. In H2, EBIT returned
to growth of 10.3% on the prior year with the EBIT margin
increasing 6 bps to 3.3%. Excluding direct COVID costs
of $61 million in the prior year, F23 EBIT declined by 34%.
ROFE declined 1.8 pts to 5.2%, primarily due to lower EBIT and
higher average funds employed due to investment in the store
network and the opening of the Auckland Fresh DC in F22.
Initiatives supporting our sustainability agenda included
fundraising support for communities impacted by adverse
weather events, including a support package of $750,000 for
fruit and vegetable growers impacted by Cyclone Gabrielle,
as well as the removal of approximately 50 million plastic
produce bags from circulation. During the year we launched
Sonder, a comprehensive health, safety and wellbeing app
for team members, and were proud to be awarded with
the New Zealand Safeguard Workplace Health and Safety
Wellbeing Award in recognition for our mental health and
wellbeing initiatives over the last two years.
1
highlights
Performance
2
review
Business
3
Directors'
Report
4
Financial
Report
5
Other
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