Woolworths counting on a Christmas bonus

Published on Wednesday 19 September 2007 11:55

ONE of the best-known names on the High Street is hoping sales in the run-up to Christmas can help overcome difficult retail market conditions.

Woolworths said today it hopes a strong schedule of DVDs and computer games due for release in the run up to December 25 can help contribute to a successful festive season.

It made the comments after reporting narrower first-half losses than over the same period last year. In the six months to August 4, Woolworths posted a loss from continuing operations of 64.7m, against a loss of 73.6m the year before. On an adjusted pre-tax basis, the loss was 59.2m, down on the 66.8m loss before.

The narrowing of the deficit came after the firm increased revenues from 983m last year to 1.1 billion, with like-for-like sales up 0.6 per cent.

The 800-store chain said that interest rate rises and the uncertainty surrounding world financial markets makes it difficult to predict consumer behaviour, but hopes purchases in its entertainment sector ahead of the Christmas period could provide a "positive stimulus" for the group.

Looking ahead to the second half of the year, chief executive Trevor Bish-Jones expects strategic initiatives such as the roll-out of the 'Worth It!' value range will continue to have a positive impact on the firm's performance.

"As ever, though, the key driver of our performance will be how well the business trades over the Christmas period," he said. "The months leading up to Christmas also mark the period of greatest demand for our distribution and fulfilment operations, in both retail and entertainment wholesale. Ensuring we are set up to meet peak flow is a priority.

"The recent rise in interest rates and uncertainty surrounding the financial markets makes it difficult to predict consumer demand for the key Christmas selling period. We have planned for our product markets to remain competitive and to keep our costs under control to maintain momentum on our margin delivery. There is the potential for the entertainment sector to provide a positive stimulus across the entire group."

In a statement with the interim results, Woolworths said that the bad weather had boosted sales for "indoor usage" products, while the computer games market has performed strongly on the back of new platform launches like the Nintendo Wii.

The book market was also boosted by the release of the new Harry Potter novel.

Following investment in in-store merchandising of the Ladybird clothing range last year, sales had continued to be strong, the company said.

And the launch of nearly 500 products in the 'Worth It' range, which includes champagne for 5 a bottle, has led to a volume and value of sales that had "exceeded internal forecasts".

Mr Bish-Jones said: "Our first-half performance is encouraging. The major contributor to the improved performance was the retail business, but we have made progress across all parts of the group. We remain cautious about the retail environment going into the important second half so are continuing to run the business tightly, with a focus on cash, cost control and margins."