Endeavour Drinks contributes to strong quarter growth for Woolworths
Woolworths Group has announced its third quarter sales results for the 2020 financial year, with growth strong across all businesses apart from hotels.
Group sales from continuing operations were up by 10.7 per cent to $16.5 billion, and group online sales rose by 34 per cent to $817 million. Endeavour Drinks total sales increased in the quarter by 9.5 per cent to $2.3 billion, with comparable sales increasing by 8.9 per cent.
Woolworths CEO Brad Banducci said the strong results are encouraging in what will be an unpredictable future economy, but that getting to this point wasn’t easy.
“The last four months have been one of the most challenging periods in the history of Woolworths. Our team is doing an incredible job of responding to these unprecedented challenges and I want to thank them for their amazing efforts,” Banducci said.
“Our team have played a critical role during these unprecedented times and while the outlook for the rest of the financial year is uncertain, we remain in a strong operational and financial position.”
Growth for Endeavour Drinks has been largely driven by sales spikes in March, with January and February sales subdued by low market growth caused by weather and the bushfire crisis. Material sales growth commenced with a pronounced surge in demand from 22 March in Victoria and New South Wales, but that sales growth rates have now begun to moderate.
Within the March surges, Dan Murphy’s was the key beneficiary of increased demand, and reported: “stronger sales growth reflecting its strong brand resonance and breadth of range.”
Beer, wine and spirits categories grew strongly across both Dan Murphy’s and BWS brands, but Endeavour Drinks does note that against usual premiumisation trends, some consumers were instead trading down and shifting to larger pack sizes and less premium products during the sales surge. However, this now appears to have returned to normal.
Contributing to growth in both brands was online sales, which increased significantly to 43.1 per cent, raising online penetration by 6.9 per cent. BWS had the greatest growth rate, albeit from a smaller base, recording a 200 per cent increase within a week during the period of peak sales.
Other initiatives that Endeavour Drinks notes includes the extension of the Endeavour Marketplace service, which offers direct from supplier delivery, and local ranging programs that give smaller producers a route to market. This has helped 300 new suppliers come on board, offering around 2,000 new products, within the last four weeks.
Apart from sales, Endeavour Drinks growth extended into new stores, with Dan Murphy’s adding one new outlet to its 240 strong network and BWS adding six new stores, bring its collection to 1359.
The Woolworths Group has warned that growth was partially offset by higher incremental operating costs to meet higher demand and support safety and social distancing in the wake of the COVID-19 pandemic. It reports that because of the current economic climate: “The rate of sales growth for the remainder of the financial year is very difficult to predict at this stage.”