Woolworths : Third Quarter Sales Results – Financial Year 2015 13 weeks to 5 April 2015

Third Quarter Sales Results - Financial Year 2015

13 weeks to 5 April 2015

Third quarter sales of $15.0 billion, an increase of 3.0% excluding Petrol1

or 2.3% Easter adjusted2 and excluding Petrol1

Woolworths Limited Chief Executive Officer, Grant O'Brien said: "Woolworths Limited today announced third quarter FY15 sales of $15.0 billion, an increase of 3.0% on the previous year excluding Petrol1 or a decrease of 1.6% including Petrol which was impacted by changes to the Woolworths-Caltex alliance1 and declining fuel sell prices.
"Easter falling largely into the third quarter this year has created a timing difference when compared to last year. Adjusting for the timing of Easter2, third quarter sales increased 2.3% excluding Petrol1.
"At the half year 2015 results, we informed the market that Australian Food and Liquor sales in December and January were disappointing. While February and March showed some improvement as we commenced the actions announced in February, April was more subdued and there is still much to do.
"As will be demonstrated through the Investor Strategy Day presentation today, the new leadership teams in Australian Food and Liquor have clear plans in place to restore sales momentum and extend our market leading position."

Australian Food and Liquor sales for the quarter were $10.6 billion, an increase of 2.3% on the previous year or 1.7% Easter adjusted2. Comparable store sales for the quarter increased 0.7% or 0.2% Easter adjusted2.
We have continued to lower our prices for customers as reflected by deflation in average prices of 2.4% for
the third quarter (Q2'15: deflation of 1.6%) when the effects of promotions and volumes are included.
The standard shelf price movement index3 which excludes investment in promotional activity increased 2.4% for the quarter (Q2'15: 3.5%), easing from the prior quarter as a result of lowering prices on everyday items for the benefit of our customers as well as cycling prior increases in tobacco excise.
Our new store openings during the quarter included five (net) Australian Supermarkets bringing the total to
952, one (net) Dan Murphy's bringing the total to 193 and six (net) BWS stores bringing the total to 1,240 (including both standalone and supermarket attached BWS stores).
Petrol sales for the quarter were $1.2 billion, a decrease of 35.2% on the previous year or 34.8% Easter adjusted2 (volumes decreased 20.8% or 20.2% Easter adjusted2), impacted by a 22% reduction in average fuel sell prices (Q3'15: 120.0 cpl and Q3'14: 153.0 cpl) and the previously advised changes to the Woolworths/Caltex alliance1 after which sales from Caltex operated sites are no longer recognised by
Woolworths.
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Petrol (continued)

Comparable sales (dollars) decreased 19.8% or 19.3% Easter adjusted2 and comparable volumes decreased
1.5% or 0.8% Easter adjusted2, showing improvement after cycling the limitations on fuel discounts at the end of January.
Strong growth in merchandise sales continued, increasing 10.3% for the quarter (9.2% Easter adjusted2) with comparable merchandise sales increasing 7.5% (6.4% Easter adjusted2), driven by successful tailored customer offers and more effective promotional activity.
We opened four (net) petrol canopies during the quarter bringing the total to 513.

New Zealand Supermarkets' sales for the quarter were NZ$1.5 billion, an increase of 5.0%4 on the previous year
(7.7% in AUD).
Comparable sales returned to solid growth, increasing 3.0%4 for the quarter (Q3'14: decrease of 1.0%4). This was achieved despite low inflation, reflecting investment in price for the benefit of our customers.
Our 'Price Drop' and 'Price Lockdown' campaigns continue to resonate well with customers, driving improved price perception results as well as growth in customer numbers and units sold.
The Countdown Supermarkets food price index for the quarter was deflation of 0.1% (Q2'15: deflation of 0.5%)
with deflation continuing across the majority of key categories, including Grocery, Meat and Bakery.
Total Countdown Supermarkets at the end of the quarter were unchanged at 174 with total franchise stores remaining at 60.

As anticipated, General Merchandise results continue to be adversely impacted by the BIG W transformation with sales for the quarter decreasing 2.1% on the previous year or 5.7% Easter adjusted2 and comparable sales decreasing 4.1% or 7.3% Easter adjusted2. Sales were also impacted by the continuing decline in Home Entertainment, the clearance of seasonal apparel and ongoing price deflation (Q3'15: deflation of 2.5% excluding
'Drop Zone' clearance activity).
During March, as part of the BIG W transformation, we launched our 'Drop Zone' campaign. We have made solid early progress with clearance activity to ensure our inventory is aligned to our customer strategy going forward.
Continued positive results from new Softgoods ranges indicate further progress with our revised customer offer. Total BIG W and EziBuy stores at the end of the quarter were unchanged at 183 and 5 respectively.
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Hotel sales for the quarter were $359 million, an increase of 0.6% on the previous year or 1.1% Easter adjusted2 with comparable sales increasing 0.2% or 0.7% Easter adjusted2. Excluding the impact of the additional Victorian gaming tax which came into effect from May 2014, sales increased 2.1% or 2.7% Easter adjusted2 and comparable sales increased 1.7% or 2.2% Easter adjusted2.
While trading conditions remain challenging, sales momentum has shown improvement during the quarter, particularly in gaming and bars and in Queensland and Victoria.
Total Hotel venues at the end of the quarter were unchanged at 330.

Home Improvement sales for the quarter were $455 million, an increase of 21.7% on the previous year (21.7% Easter adjusted2).
Masters sales for the quarter were $217 million, up 21.2% on the previous year (19.2% Easter adjusted2). We continue to make progress on the Masters priorities outlined in August, focused on addressing range in key customer visitation categories, commencing the roll-out of our new store format and refocusing our new store opening schedule to focus on key metropolitan sites.
We opened two stores in our new format during the quarter (New South Wales and Western Australia) and they are providing positive early results. Through new store openings and refurbishments, we plan to have 13 stores (approximately 22% of our network) in the new format by the end of the financial year.
Home Timber and Hardware sales for the quarter were $238 million, up 22.1% on the previous year (24.0% Easter adjusted2), driven by sales from recent store acquisitions as well as enhancements to our trade offer. Excluding the impact of acquisitions, underlying sales were positive.
The two Masters stores opened during the quarter bring the total to 53 with Home Timber and Hardware store numbers remaining unchanged at 44.

Further information in relation to the strategic activities of the Group are provided in the Investor Strategy Day announcement, also released today.

- Ends -

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Media
Claire Kimball, Head of Group Communications
+61 432 696 650
Investors and Analysts
David Marr, Chief Financial Officer
+61 2 8885 1105
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Year to Date Sales ($ million)

Australian Food and Liquor 32,821 31,859 3.0% 2.8%

Period ($ million)2015 2014 Increase

Quarter One (14 weeks) 16,154 15,680 3.0% n/a Quarter Two (13 weeks) 16,277 16,163 0.7% n/a Quarter Three (13 weeks) 14,956 15,192 (1.6)% (2.1)% Year to Date Sales (40 weeks) 47,387 47,035 0.7% 0.6%

Quarter One (14 weeks) 14,309 13,749 4.1% n/a Quarter Two (13 weeks) 14,816 14,429 2.7% n/a Quarter Three (13 weeks) 13,775 13,370 3.0% 2.3% Year to Date Sales (40 weeks) 42,900 41,548 3.3% 3.0%
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1 Petrol sales and volumes are not comparable with the prior period given changes to the Woolworths-Caltex alliance

that became effective progressively during Q2'15.

At the end of FY14, the Woolworths-Caltex fuel network comprised 633 sites, including 131 Caltex-operated sites with the remainder operated by Woolworths.

Given operational changes under the new arrangements with Caltex, Woolworths no longer recognises sales from the Caltex-operated sites in its financial results. The new arrangements do not have a material profit impact on the Woolworths Group.

Under the revised arrangements, 92 of the Caltex-operated sites were rebranded as 'Star Mart' or 'Star Shop'

convenience stores and have continued to offer the Woolworths fuel discount redemption.

The remaining 39 sites, which were located in close proximity to Woolworths Petrol sites, have exited the Woolworths- Caltex alliance and no longer offer Woolworths fuel discount redemptions.

By the end of FY15, we expect Woolworths petrol discounts will be redeemable at approximately 100 Caltex-operated

'Star Mart' or 'Star Shop' sites and at more than 500 Woolworths-operated sites. Woolworths has no plans to close sites as a result of any of these changes to the alliance.

Further details on the revised arrangements with Caltex are provided in our ASX announcement dated 20 November

2014.

2 In FY15, the first week of the Easter trading period fell into Q3 whereas in FY14, Easter was included in Q4. The impact of Easter is an approximation only and has been estimated by adjusting FY14 sales to reflect the timing of Easter in

FY15.

3 The standard shelf price movement index is calculated by comparing the number of comparable products sold in the current year using the current year prices to the number of comparable 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.

4 Growth for New Zealand Supermarkets is quoted in New Zealand Dollars.

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