Woolworths Group CEO Amanda Bardwell told investors that clothing remains a challenge at its subsidiary Big W in the third quarter, as the low-price retailer faces further slumps in sales.
“Clothing remains a challenge with Q3 growth reliant on clearance of Spring/Summer, and a slower start to Autumn/Winter which has continued into April," Bardwell said. "This has impacted Big W’s profit outlook with the loss before interest and tax for H2 now expected to be approximately $70 million.”
Big W sales fell by 1.5 per cent in Q3 compared to the same quarter last year, dipping from just over $1 billion to $986 million. The fall was driven by in-store sales which fell by 2 per cent and offset by online sales, which rose by 4.3 per cent.
The latest sales slip followed a 0.4 per cent fall in total sales to $2.58 billion for the first half of FY25, with both store sales and online down by 0.3 per cent and 1.6 per cent respectively
Despite challenges in clothing, Woolworths Group reported that clothing did return to growth for Big W. However, increased markdown investment was required to accelerate the sell through of the Spring/Summer range, where launch availability in the first half was impacted by challenges associated with the timing of stock receipts and shipping delays.
Bardwell added that the retailer's customer scores remained strong with Easter-adjusted sales increasing 1.9 per cent (total sales: -1.5 per cent) supported by growth in its home and play categories.
Across the Big W sales metrics – sales growth, transactions, items per basket and item – all four fell when adjusted for the non-comparable timing of Easter and New Years Day, but rose slightly when adjusted just for Easter timing.
Play growth was driven by toys due to everyday low pricing and continued strong momentum in own brand (Somersault) which offset declines in gaming, office & stationery, and books.
Meanwhile, Big W eCommerce sales were $87 million in Q3 with eCommerce penetration at 8.9 per cent.
Including Big W Market – Big W’s marketplace platform – eCommerce gross merchandise value (GMV) increased by 49.2 per cent to $145 million with penetration of 13.9 per cent.
Digital traffic reportedly increased by 20 per cent across both the web and app.
The Everyday Rewards scan rate of 58.2 per cent in the quarter was supported by participation in the Woolworths Group-wide Minecraft Cubeez collectibles.
Big W’s total store network remained unchanged at 179 during the quarter.
Big W’s total sales slump in Q3 did not affect total group sales, which lifted by 3.2 per cent in the third quarter to $17.3 billion. Woolworths Group’s main market is food – Woolworths supermarkets – where sales lifted by 3.7 per cent to $13.05 billion.
"With only two months until the end of our financial year, we remain focused on the priorities set out in February which include improving our retail fundamentals in value, availability and range, simplifying the way we work and unlocking the full potential of the group,” Bardwell said.
“While the market remains competitive and consumer outlook uncertain, we are making progress in these areas and will provide a more detailed update at our full year results in August.
“Cost of living remains a concern for customers, however customer scores were largely stable during the quarter and sales growth rates improved modestly across the group.”