Woolies sales decline, price deflation blamed

Having issued a shock trading statement in early December, Woolworths also told the City that the retailers’ year-end retail stocks will be at least £20 million lower that the previous year end period.

The latest trading statement highlights CD, DVD and seasonal confectionary as ‘difficult areas’, and while games were not mentioned specifically, it is thought price competition from the likes of Tesco and Asda in the sector have contributed too.

As a result, full year figures are expected to show a “significant reduction in year-on-year profitability.”

“Woolworths retail found some of its traditional markets more difficult, leading to disappointing like-for-like sales over the Christmas weeks,” said chief executive Trevor Bish-Jones. “Despite this, stock levels have been well controlled and we continue to improve our gross margins. We continue to work at building a better business through necessary investment in stores and systems and the development of a multichannel capability which is being rapidly embraced by our customers.”

Meanwhile sales at the newly-combined EUK and THE distribution arm were up by 24.2 per cent and described as ‘satisfactory’. After Music Zone, one of THE’s clients, went into administration earlier this month, precise levels of losses from the chain has yet to be identified, but are estimated to be between £2 and 4 million.

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