Day Trading October 29 - Morning, page-129

FED:Woolies shares plunge on profit warning
BRISBANE, Oct 29 AAP - Shares in Woolworths have plummeted after the supermarket giant
warned of a significant fall in profit as battles stiff competition from Coles and Aldi.
The struggling retailer on Thursday forecast a drop in its profit of up to 35 per cent
for the first six months of fiscal 2016.
The company's share price was down $2.25, 8.2 per cent, to $25.12 at 1102 AEDT.
Woolworths' food and liquor sales rose by a mere 0.4 per cent to $11.1 billion in the
three months to October 4, compared to a 3.9 per cent rise in the same period a year ago.
Like-for-like food and liquor sales declined 1.0 per cent.
Coles last week reported first quarter like-for-like sales growth of 3.6 per cent,
indicating Woolworths has given up more market share to its main rival.
Woolworths recently launched a $500 million program to lower food and grocery prices
in a bid to win back customers and to contain German discounter Aldi, which is
aggressively expanding into South Australia and Western Australia.
CMC Markets chief market analyst Ric Spooner says that while the market expected a
weak result, the steep profit warning raises fears that there is more bad news in the
pipeline.
"Woolworths appears to have lost more market share to Coles and there are fears there
may be worse to come as it progresses its huge investment in lowering prices, which hurt
profit margins," he said.
"Investors are going to be nervous until Woolworths shows signs of things stabilising
or of a turnaround."
Chairman Gordon Cairns said the impact of previously announced investments would lower
margins at its supermarkets and drag down first half net profit by between 28 and 35 per
cent.
Total first quarter sales fell 2.5 per cent to $15.7 billion.
Petrol sales declined by more than a quarter following a drop in global oil prices and
the transition of some sites to Caltex.
General merchandise sales, dominated by the Big W chain, dropped just under eight per
cent.
But the group's big box hardware chain Masters lifted sales by more than a fifth
largely due to new store openings.

WOOLWORTHS SALES SLIDE AMID TOUGH COMPETITION:
* Aust food & liquor up 0.4pct to $11.1b
* Petrol down 27.9pct to $1.33b
* General merchandise down 7.9pct to $974m
* Hotels up 3.3pct to $412m
* Masters up 23.5pct to $294m
* Home Timber and hardware up 17.1pct to $274m
* Total group sales down 2.5pct to $15.75b

AAP peb/cdh/bt