Woolworths Group returned to profit in 2007, with improvements to the supply chain cutting inventory levels and reducing the need to sell stock at reduced prices.
In its Preliminary Results Announcement the high street store chain and media distribution company had maintained a strong focus on improving the supply chain throughout 2007. This included significant increases in the “sophistication of the IT systems” as well as improvements in warehousing and transportation networks. Tony Godwin, IT director at Woolworths told CIO that his goals for 2007 were to further enhance its multi-channel offering through additional server capacity and improved services to fulfil customers’ orders. He also planned to extend the SAP enterprise platform to include warehouse management and to improve the tracking of stock distribution. In an interview for the CIO 100 he said, “We plan to review our current information provision – both corporate and ad hoc – with the aim of improving the quality, what’s available at what level and ensuring we have a more rigorous and standardised approach.”
Chief executive Trevor Bish-Jones said of the improvements and return to profitability, “We believe that significant opportunity remains to enhance the profitability of the business through a combination of increased direct sourcing, greater efficiency in the distribution network and still further sophistication of the IT systems that handle replenishment.”
Despite the good news, the retailer cut its final dividend by 87 per cent and announced a drop in pre-tax profits. Sales at the retail division fell by 3.2 per cent, like-for-like, but the retail division moved from loss to profit. Profits of £3.4 million were achieved, compared to a loss of £12.9m in 2006. Group pre-tax profits were also down at £11.7m compared to £16m in 20060. Revenues for the entire group were up by 8.5 per cent to £2.97 billion.
“Given the advances made across the business last year and our plans to make further improvements this year to the customer offer and the store portfolio, while continuing to cust costs, we are well placed to make continued progress in this financial year,” Bish-Jones said.
Woolworths Group has also announced plans to include Somerfield supermarket franchises within its stores. In 2001 Woolworths Group split from the Kingfisher retail chain that owns DIY brand B&Q. The company is now listed on the London Stock Exchange and is involved in distributing CDs, books and DVDs to other chains and public libraries.