MMI am waiting for the Australian media to give some attention...

MM

I am waiting for the Australian media to give some attention to WOW's exceptional performance on this side of the Tasman apart from regurgitating negatives about the move into home improvement as they have been doing the last 12 months.

Countdown represents only around 10% of the Group food and liquour EBIT, but there emerging acendency in this market warrants mention imo. Its a part of the business that is performing exceptionally well in tough conditions and management should be commmended.

Their 3% Revenue growth should be viewed in comparison to their Largest competitor Foodstuffs which I believe had Revenue growth of under .3%. Foodstuffs have around 58% of the Supermarket business compared to Progressives (WOW subsidary) share of 37%.

NZ Supermarkets EBIT/Sales expanded 30bp to 5.27% which is still significantly under Australian Supermarket EBIT % of 6.79 therefore there is still room for margin expansion as well as market share growth.

Foodstuffs are a well run business that have dominated the NZ grocery market over the last 20 years. I clearly remember Roger Corbett commending Foodstuffs as a tough competitor when WOW first reentered the NZ market 6 years ago.

Now I have heard people within Foodstuffs openly stating that round one is over and they are regrouping (ie conceeding ground lost).

Progressive have out marketed the competition and are benefitting from Capital investment at both store level and the DC's that power the logistics of the business.

The next stage is swarming more retail outlets through a greenfields site expansion. They are opening Countdowns at a faster rate than Foodstuffs are opening competing stores. The new sites that I am aware of are very well targeted imo, specifically targeting strong performing competing stores and filling any gaps in the store format.

As I have said its a smaller part of the over group but should be recognised not only for the potential gains available but also because its an area in the business that has been very well planned and executed since the aquisition and is starting to show tangible results.