Woolworths (WOW) SNAPSHOT
Profile: Woolworths Group (WOW) is an Australian-based company that operates businesses such as Woolworths Supermarkets and Big W nationwide, and the Countdown Supermarkets in New Zealand. Other operations include Hotels and Liquor (Endeavour Drinks) – through brands such as Dan Murphy’s and BWS – as well as other wholesale businesses.
History: Woolworths Stupendous Bargain Basement opened in Sydney’s Imperial Arcade on 5 December 1924. In 1929, WOW opened its first store in New Zealand. In 1976, the first Big W store opened in NSW. WOW listed on the ASX in 1993. In April 2019, WOW completed the sale of its Petrol business for c.$1.7bn. On 2 February 2020, Endeavour Group was formed through an internal restructure where the Woolworths Drinks Business and WOW’s 75% ownership in ALH Group were transferred into a distinct legal entity within WOW. On 4 February 2020, WOW acquired Bruce Mathieson Group’s (BMG) 25% interest in ALH Group in exchange for a 14.6% stake in Endeavour Group.
Earnings composition: Australian Food generated $1.2bn, or 62%, of 1H20 EBIT (Earnings Before Interest and Tax). New Zealand Food and Endeavour Drinks generated EBIT of A$175m (9%) and $338m (18%) respectively. Hotels reported EBIT of $224m (12%). BIG W reported EBIT of $50m (3%). The Other segment, which includes overheads, reported a $71m (-4%) loss.
Most recent result – 1H20: EBIT from continuing operations was $1.89bn, up 11.4% (with 1H19 normalised for impacts of AASB 16 accounting changes) on the prior corresponding period (pcp). The result was driven by strong performances in all segments, with sales from continuing operations increasing 6% on the pcp to $32.4bn. NPAT from continuing operations was up 15.7% on the pcp to $979m. A $0.46 dividend was declared, up slightly from $0.45 in 1H19.
Company outlook: Subject to approvals, WOW intends to separate Endeavour Group from Woolworths through a demerger or “value-accretive alternative”. WOW has deferred the separation to calendar year 2021 due to COVID-19.
Important dates: Ex-dividend date was 4 March 2020. Payment date is 9 April 2020. 3Q20 results scheduled for 30 April 2020. FY20 results scheduled for 27 August 2020.
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