Hotel closures hit Woolies profit

WOOLWORTHS has booked a full-year profit plunge with rising supermarket sales during the coronavirus pandemic failing to counter financial pain from hotel closures.

The group’s chief executive Brad Banducci said COVID-19 had “distorted” earnings growth in the second half of 2019-20 as lockdown restrictions forced its hotel and gaming operations to halt, while supermarket sales surged.

Australia’s largest retailer posted a net profit of $1.16bn, a 21.8 per cent plunge on last financial year.

Earnings dipped 0.4 per cent to $3.2bn, while total sales rose 8.1 per cent to $63.7bn.

“The closure of hotels for much of the last four months of the financial year led to a material decline in second-half earnings (EBIT) compared to the prior year,” Mr Banducci said. “However, the impact of the closures was partially offset by strong sales-driven EBIT growth across our retail businesses despite materially higher customer and team safety costs.”

The group’s online sales soared 41.8 per cent to $3.5bn as consumers embraced digital retailing.

Woolworths said shoppers frequented the supermarket less during the lowdown but bought more. Sales at Big W were particularly strong during the June quarter, with online sales skyrocketing 181 per cent.

Total earnings within Woolies’ drinks and liquor business rose 5.7 per cent for the year, with most of the growth occurring in the first half.

Hotel earnings plunged 51 per cent as there was little to no revenue during the shutdown.