Woolworths (ASX: WOW) doesn’t live up to the hype
Stock Woolworths (ASX: WOW) $28.75 as at 20/02/2019 Event Woolworths (ASX: WOW) is trading strongly lower today after a soft half year result was reported this morning. The stock is down over 5% nearing 2 month lows. Top line for WOW was ok with revenue coming in marginally ahead of consensus ($30.7b vs $30.6b consensus) with sales growth hitting the target, adding another 2.7% in the previous quarter. Profit was the issue here at $920m on continuing operations being around a 5% miss on the markets numbers. Food sales remain solid while drinks took a hit in the half with the company blaming cooler weather for the lower than expected growth of Dan Murphy’s. A highlight of the result is the continued improvement of Big W which had second quarter sales growth of 5%. Once a huge drag on Woolworths it now seems to be turning around with the next step to turn sales in to profits. Here FY19 losses are expected to be less than FY18’s $110m loss. Outlook statements for the company talked to continuing strong sales growth however did note that the operating environment is becoming tougher with soft consumer demand as well as higher input costs to weigh on profits. Investors now turn to the planned sale of Woolworth’s petrol business for $1.7b which is awaiting Foreign Investment Review Board (FIRB) approval with the company flagging the potential for an off-market buy-back similar to that of Rio and BHP. Woolies has a large franking balance it can work with, and being a long time loved stock of super funds the buyback would be lapped up by shareholders. Woolworths (ASX: WOW) Chart worths Market Matters Take/Outlook
