Woolworths reports £100m losses

Published on Wednesday 17 September 2008 09:45

HIGH street chain Woolworths today reported losses of almost £100 million for the six months to the start of August.

While the group generates the majority of its business in the run up to Christmas, Woolworths said the results highlighted the "operational issues and strategic challenges" faced at its retail arm.

Sales for the retail business were 660.7 million in the half-year, down 3.2% on a like-for-like basis, while the company's entertainment wholesale and publishing arm – including its BBC Worldwide joint venture 2entertain – posted flat sales of 446.3 million.

Overall group losses of 99.7 million compared with a deficit of 63.8 million a year earlier. Operating losses for the retail business, which trades from around 800 stores in the UK, were 69.5 million.

Former Focus DIY boss Steve Johnson, who joined the company as chief executive earlier this month, said: "Right now, this business does not require lots of new strategic initiatives, it requires a good dose of basic shop keeping and attention to the detail of retailing.

"Everyone in Woolworths is clear that our first priority – in all parts of the group – is delivering a successful Christmas for our customers."

Last month the Woolies board rejected an informal approach for its 815 stores from investment group Baugur and the founder of the Iceland food chain Malcolm Walker. Reports have suggested the parties remain interested in the chain's stores.

Woolworths is currently working on its own strategic review and revealed recently that consultants believed it had the potential to build a sustainable business based on its small and medium-sized stores.

Shares in Woolworths fell another 7% today after it warned deteriorating credit insurance markets may increase its working capital requirements. However, the group insisted it expected to operate within its existing borrowing facilities.

Seymour Pierce retail analyst Freddie George said today's figures came in worse than expected, adding his forecast for a 2 million full-year loss was under review.

He said: "We still expect the existing offer from the Malcolm Walker consortium offer to falter while there are no easy win strategies for Woolworths."