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Countdown earnings fall, quake costs mount

NZ Newswire logoNZ Newswire 22/02/2017 Rebecca Howard

The Countdown supermarket chain posted a 4.5 per cent drop in first-half earnings due to a strategy of investing in team hours, costs of a new loyalty alliance with AA Smartfuel and uninsured losses related to the November earthquake.

Earnings before interest and tax fell to $163 million in the 27 weeks to January 1 from $170.6m in the previous year, its ASX-listed parent company Woolworths announced. Sales were $3.23b versus $3.18b in the prior corresponding period, up 1.6 per cent.

According to the company, sales in the prior year benefited from the bulk sales of gift cards. Excluding the sales of these cards, sales growth was 2.8 per cent, it said.

The supermarkets' own food price index showed deflation of 0.2 per cent over the half, driven by lower prices in grocery, and reduced inflation in seasonal fruit and vegetables. It said the cost of doing business or CODB increased 62 basis points reflecting the investment in team hours, the cost of the new loyalty alliance and the impact of the November earthquake.

Sales per square meter declined by 0.4 per cent with the reported sales more than offset by an increase in average trading space of 2.9 per cent despite the closure of one net store during the half year, it said.

Woolworths reported total group earnings before interest and tax of A$1.26b, up 170 per cent on the year and a net profit of A$725.3m, up 175 per cent. A year ago, however, it reported its first loss in 23 years after taking A$1.9b in write-downs on the Masters home improvement business.

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