Woolworths reports $1.23 billion losses in FY16

Woolworths has reported a full year loss of A$1.235 billion and a 40.8 per cent decline in underlying earnings from its Australian food and fuel business.

The steep drop in profit comes at a difficult time for the Australian retailer, which faces tough competition from discount markets such as Aldi, has just quit its Masters hardware joint-venture with U.S. firm Lowe´s, and is considering selling its entire fuel business.

“The decisions we have taken and investments we have made have had a material impact on our FY16 results but have been necessary to begin the rebuilding of Woolworths,” said Woolworths Group chief executive Brad Banducci about the FY16 results.

Petrol sales were $4.6 billion, a decrease of 18.1% on the previous year (volumes decreased by 9.1%). Sales were impacted by changes to the Woolworths – Caltex alliance in FY15 where sales from 131 Caltex operated sites were no longer recognised by Woolworths, and declining average fuel sell prices.

After disinvesting in the DIY joint-venture, Woolworths is prepared to rebuild its supermarket business in order to fend off competition from discount supermarkets.

Regarding its fuel business, last week Caltex Australia chief executive Julian Segan confirmed the company´s interest in Woolworths' $1.5 billion petrol station business.