* 2017 H1 underlying profit A$785.7 mln vs A$943.6 mln 2016
* Interim dividend 34 cents vs 44 cents (2016)
* Underlying H1 sales A$29.1 bln vs A$28.3 bln
(Updates to add picture)
By Byron Kaye
SYDNEY, Feb 22 Australian supermarket leader
Woolworths Ltd on Wednesday beat rival Coles in food
sales growth for the first time in more than seven years on a
quarterly basis, as its decision to sell its struggling hardware
business paid off.
For 29 straight quarters Woolworths has seen No. 2 rival
Coles, owned by Wesfarmers Ltd, gnaw at its share of
Australian grocery dollars as Woolworths charged customers more
to compensate for the loss-making hardware chain.
Under new Chief Executive Officer Brad Banducci, Woolworths
has quit the hardware business, and other non-core units like
service stations, enabling it to cut shelf prices and spend on
staff bonuses and training to win customers back.
While net profit from continuing operations fell to its
lowest in a decade in the half-year to Jan. 1, food sales grew
3.1 percent in the second quarter, Woolworths said, triple the
rate reported by Coles a week earlier and beating it for the
first time in 30 quarters.
"There are genuine signs in the numbers today that
Woolworths is turning around," said Evan Lucas, a strategist at
Net profit from continuing operations fell by a sixth to
A$785.7 million ($603 million) for the six months to January.
Including one-offs like charges for its hardware exit, the
company swung to an interim net profit of A$725.3 million from a
A$973 million loss the previous first half.
Woolworths cut its interim dividend to 34 Australian cents
from 44 cents, but its shares rose more than 4 percent in
intraday trading to their highest intraday peak in 15 months,
while the broader market was flat.
"We were comfortable with the progress we made to ensure we
had the right the right mix of price for customers (but) we feel
we still have some work to do on how we communicate price,"
Banducci told journalists.
He offered no earnings outlook but said the company expected
"trading conditions to remain competitive for the rest of this
Woolworths said it experienced deflation of 0.2 percent in
the first half, led by cheaper fruit and vegetables.
Group sales from ongoing business rose 2.6 percent to A$29.1
The company said its costs were driven higher, in part, by
A$110 million in performance bonuses.
($1 = 1.3029 Australian dollars)
(Reporting by Byron Kaye; Editing by Stephen Coates)