WOOLIES: Down 3.1% at half time

Woolworths has issued a half-year trading update, showing group sales down 3.1 per cent.
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Group sales for the 25 weeks to 26 July 2008 were down 3.1%. Sales in Woolworths Retail for the 25 weeks were down by 3.2%. Since last updating the market, Woolworths Retail like-for-like sales for the six weeks to 26 July have fallen by 6.7%.

Due to the continued strength of the entertainment market, a larger proportion of sales came from lower margin CDs and DVDs, with a lower proportion from higher margin warm weather outdoor products and clothing. This, together with additional clearance activity, means that the margin rate in the first half is expected to be approximately 125 basis points below last year.

The Board is continuing its search for a new CEO. In the meantime, it has undertaken a review of the group's businesses.

The firm believes it can build a "sustainable value retail proposition based primarily on its small to medium sized stores."

The review has also highlighted opportunities for improved stock management in the areas of ordering, weeks of stock cover held and availability. .

Richard North, Chairman of Woolworths, said: "The Board of Woolworths is continuing the search for a new Chief Executive to take the group on to the next stage of its development. In the meantime, we have begun the detailed work that needs to be carried out to rebuild the retail business around the core of more profitable small and medium sized stores.

"Our EUK and 2e businesses are continuing to trade well. The retail business, however, has seen a marked worsening of conditions in June and July in an increasingly competitive market. This is reflected in the sales figures for the last six weeks. In addition, sales over the first half as a whole have been achieved with a disappointing margin performance.

"Looking ahead we remain cautious about the outlook for retail given the background of a weakening consumer economy. But we have strong operational management in place in all parts of the business who are working hard to ensure that the needs of all our customers - both wholesale and retail - continue to be met."


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