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Australia:Supermarket major Woolworths seen surging ahead |
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2004-9-21
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Woolworths shares raced ahead more than 13 percent since it reported its annual profit last month.
Further gains ahead are seen by some analysts.
However, they warn the once-dominant supermarket retailer will face increasing competition from Coles Myer as it follows Woolworths down the cost-cutting path.
Woolworths shares closed down 22c on Friday at $13.58.
They were at $11.96 before the August 23 report of a $731 million net profit, just 16c above their January 1 level.
CommSec retail analyst Craig Woolford has forecast a "very strong" outlook for Woolworth due to revenue growth from its discount-petrol expansion and benefits from cost savings.
It was "focusing on supply-chain initiatives and reducing costs and a reasonably strong result in 2003-04 was driven by margin expansion because of costs they could take out of the business".
That was expected "to accelerate in 2005".
Woolford said while supply-chain initiatives had been flagged by Woolworths for some time, the dollar benefits were just now being felt.
"I can see further momentum in the share price," Woolford said.
However, with Coles Myer and now Metcash putting similar cost savings in place, Coles could be pressuring Woolworths by 2006.
"That''s when Coles starts really ramping up its supply-chain program," he said.
Woolworths is not a recovery story – it is an industry leader that now finds its competition catching up with respect to offers to customers," he said. |
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