Woolworths Group Limited (ASX: WOW) is a locally owned public firm that generates its revenue from the retail sale of liquor, supermarket food, general merchandise and the operation of hotels. The group’s main business operations are segregated into 5 broad categories – Australian Food, New Zealand Food, Endeavour Group Limited, Big W and Hotels. The firm operates in Australia and New Zealand and is administered from its head office in Bella Vista, New South Wales.
Reasons for Potential Opportunity
In May of 2021, Woolworths Group announced the demerger of its Endeavour Group, Australia’s leading retail drinks and hospitality business. The premise of the demerger is to create simpler, more focused, independent businesses better equipped for future growth. More so, in June of 2021, the ACCC did not oppose the Woolworths Group to acquire 65% of PFD Foods. If the deal goes ahead in late of 2021, this will add to the company’s investment portfolio and supply chain service, with PFD Foods being a major client for Collins Food Group.
The group released their FY21 report in August, highlighting their total sales of over AU$67 billion, and an earnings before interest and tax (EBIT) of AU$3.6 billion. Woolworths had a significant focus on COVID safety as a member of one of the most vital markets during restrictions and lockdown periods. The company has also noted that there is still work to be done on the previously mentioned demerger of Endeavour Group as both businesses transition from an ownership structure to a partnership. FY22 priorities for Woolworths Group include leading sustainability practices in the market, scaling their retail business platforms, and extending into adjacent markets.
Brad Banducci | Managing Director & Chief Executive Officer
Mr Banducci assumed the role of Managing Director of Woolworths Food Group in March 2015 and CEO of the group in February 2016. He joined the group in 2011 following the acquisition of the Cellarmasters Group, a direct wine retail and production firm. Prior to this, Mr Banducci was the Chief Financial Officer and Director at Tyro Payments and a Vice President and Director with The Boston Consulting Group.
Gordon Cairns | Chairman
Mr Cairns assumed the role of Chairman in September 2015. He boasts more than three decades of food and retail experience, including his tenure as Chief Executive Officer at Lion Nathan. Mr Cairns was also the Chairman of Origin Energy and a director of Macquarie Group and Macquarie Bank. His other roles include being the Chairman of David Jones and Rebel Group, as well as a director at Westpac Banking Corporation.
Fundamental Performance Indicators
|Per Share Statistics||FY17||FY18||FY19||FY20||FY21|
|Cash Flow ($)||2.43||2.25||2.24||3.61||3.66|
|Operating Margin (%)||6.00||6.40||6.60||8.90||9.70|
|Net Profit (m)||1,534.00||1,724.00||2,693.00||1,165.00||2,074.00|
|Net Gearing (%)||21.50||14.10||19.30||183.70||798.10|
|Dividend Yield (%)||3.30||3.40||3.10||2.50||2.80|
|Capital Structure||Cash ($m)||Total Debt ($m)||Equity ($m)|
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