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Liquor sales slow for Woolworths

Woolworths Group has revealed there were two “very distinct” trading periods for Endeavour Group in Q3, with sales increasing by 6.3% after being up 14.4% for the first seven weeks.

Woolworths Group CEO Brad Banducci said the the first seven weeks represented the period before the liquor giant began to cycle COVID and the second six weeks were as it cycled the peak growth of the prior year, with sales declining by 1.6%.

“Group sales growth was strong in the first seven weeks of the quarter,” he said. “For the final six weeks, food and drinks sales declined on the prior year as expected, BIG W remained strong, and Hotels’ sales growth started to recover as it cycled closures at the end of Q3 in the prior year.

“Despite the volatile trading over the quarter on a one-year basis, two-year average growth rates in Australian Food, Endeavour Drinks and BIG W remained above-trend. Due to the distortive impact of COVID on Easter trading in the prior period, we have not reported Easter-adjusted sales.

“Customer scores across the Woolworths Group remained strong but comparisons to the prior year are flattered by COVID-related availability and capacity issues in Q3 F20.”

“In general, customer shopping behaviours continue to normalise. While food customers are still shopping less frequently, the
growth in the number of items customers put in their baskets is slowing. Customers are also shopping more on weekends, statebased performance is becoming more balanced and there is less divergence in trading across the fleet, other than in CBD and transit locations. While we remain vigilant in looking after the safety of our customers and team, COVID costs continued to trend down over the quarter.”

The highlights for Endeavour

Banducci said Endeavour’s comparable sales growth increased by 5.5% with two-year average comparable sales growth remaining strong at 7.2%.

By category, Spirits and RTDs continued to grow strongly supported by gin and seltzers. Wine sales declined marginally for the quarter due to the strong sales in March in the prior year. Beer sales were also impacted by the prior year sales surge, ending the quarter in line with Q3 F20 but with craft beer sales “remaining buoyant”.

My Dan’s loyalty members increased by over 200,000 during the quarter bringing the total to 5.3 million members at the end of the period. BWS customer engagement with Everyday Rewards also increased with scan rates of 43.9%, materially up on the prior year.

eCommerce sales increased 23.8% to $193 million, with eCommerce penetration of 8.0% of total sales.

During the quarter, nine new BWS stores were opened, and a further 11 stores were renewed. Three stores were closed, ending the quarter with 1390 BWS stores nationally.

Dan Murphy’s opened a new store in Newstead, Queensland and launched its latest store format in South Melbourne, Victoria, ending the quarter with a total network of 247 stores.

Current trading and outlook for 2021

“Turning to current trading and outlook, sales growth for the first three weeks of April remained volatile and impacted by prior year growth rates and the timing of public holidays,” Banducci said.

“Endeavour Drinks sales in April remained above last year but are expected to slow when we cycle growth of over 30% in May and June.

“We continue to expect sales to decline over the March to June period for all businesses other than Hotels where Q4 F20 sales declined 86.3% on a normalised basis. Despite this trading volatility, we remain focused on delivering the best possible
experiences for our customers.”

Banducci said the Endeavour Group demerger remains on target for late June.

“Key milestones during the quarter include securing financing commitments for Endeavour Group’s proposed debt facilities and finalising board and management appointments which will be announced in due course. Subject to board and regulatory approval, demerger documentation is expected to be released in mid-May.

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