Australian retailer Big W has recorded an 8% lift in sales in FY23 on FY22, but a 0.3% slip in the second half compared to the prior corresponding period.
Total sales for the low-price department store hit $4.78 billion in FY23 and $2.07 billion in just the second half. While earnings before interest and tax (EBIT) was up 165.3% for the year to $145 million, it slumped by 63.7% to $11 million in H2 FY23.
Parent company Woolworths Group noted sales were down 5.7% in the fourth quarter due to a notable softening in discretionary spending and, to a lesser extent, the timing of Easter.
Everyday essentials such as health, baby and pet care categories, and leisure products continued to see item growth but Woolworths noted discretionary areas including clothing and home were impacted by the rising cost of living on households.
eCommerce sales decreased 22.2% in FY23 to $482 million, with Woolworths citing a 31.4% decline in H1 as customers returned to shopping in-store for the decline and cycling of COVID-driven online purchasing behaviour.
eCommerce sales declined 3.3% in H2 with penetration of 10.1%.
Woolworths Group CEO Brad Banducci said the trading environment for Big W changed dramatically between the first half and the second half of FY23.
“After delivering a strong H1 result, we indicated in February that the H2 EBIT contribution would likely revert to more typical seasonal patterns,” Banducci said. “H2 ended up below our initial expectations as customers cut back on discretionary items, particularly in Q4, and the sector became extremely competitive with higher levels of promotions and discounts.
“While F23 EBIT of $145 million more than doubled on the prior year, H2 EBIT of $11 million was below H2 F22 due to flat sales, higher promotional activity across the market and rising unit costs driven by team wage investments.
“Pleasingly, our customer scores remained strong, including value for money metrics, and digital interactions continue to grow. We also launched Cartology in Big W during the year with 175 screens in-store by year end.”
Cartology is Big W’s exclusive retail media partner launched in June 2022, covering in-store and digital.
Woolworths also launched a select Big W range on MyDeal in August 2022, which it claimed has seen consistent sales growth on the platform since implementation
On current trading and outlook, Banducci said sales in the first eight weeks of FY24 have shown a similar trend to Q4 with growth in its food business but declines in Big W sales on the prior year.
“Big W sales momentum continues to be challenged with sales down approximately 6% in F24 to date,” Banducci said. “While Big W is being impacted by the broader discretionary spending slowdown in Australia, some categories like everyday essentials are performing strongly.
“Loyal customers are continuing to shop with Big W, and we are seeing some trading-in but customers are cautious, putting fewer items in their baskets.
“The outlook for the remainder of the year is uncertain and as always, trading in Q2 will be key to the full-year results.”
The Big W store network grew by one store during the year to 177 stores following the opening of a new space in Q1. Sales per square metre increased by 7.9% due to the strong sales growth in H1.