Plenty to read in yesterdays update, certainly O'Brien has given...

Plenty to read in yesterdays update, certainly O'Brien has given a clear indication of his focus and direction.

I would like to briefly comment on slide 34. I have watched WOW transform Progressive Enterprises (PEL) in NZ since they acquired it in late 2005.

What slide 34 shows exemplifies WOW to me. Over 4 years they have grown Revenue in Progressive by 4.3%pa, however EBIT over the same period has grown 8.2%pa.

WOW are masters at driving efficiency across their business, they have proven adept at stripping out cost and improving margins across their food and liquour businesses. This is the true power of Woolworths are the reason they enjoy some of the highest margins out of any Grocery retailer in the world.

The transformation of PEL and the massive CAPEX injected (over 500 million) to make the transformation is nearing completion. Gone are two of the three Retail brands they inherited. It is now all streamlined into one Brand (Countdown). Gone is the duplication in mailers, divided advertising spend etc.

Autostocker has stripped all the stock out of the back of stores (it is now delivered and placed straight on the shelves) reducing Working Capital requirements.

They have transformed the distribution part of the business through investment in state of the art DC's, which further drive down the CODB.

PEL is now looking leaner and more focused, and IMO is now tranformed into another cash machine for WOW. I expect you will see further margin expansion in this business unit over the next few years.

Question: Has anyone visited a Masters store yet? Would like to hear some comments.