Big W has recorded a 4.1% drop in total sales in the first half of FY24, hitting $2.59 billion.
The low-price retailer has also recorded a 60% drop in operating profit (EBIT) to $163 million.
It comes amid a challenging trading environment and a reduction in customer discretionary spending, particularly across clothing and home.
Sales trends improved in the second quarter for Big W, compared to Q1, with total sales down 3.1% driven by Black Friday and Christmas events.
Big W’s play (toy) segment saw an uplift in item growth, with sales across everyday items such as health, beauty and pet care products remaining flat.
In the half, Big W dropped prices on over 2,350 products, launched a member price initiative, and implemented reductions in lay-by service fees.
“As foreshadowed last month, Big W had a challenging first half,” Woolworths Group managing director and CEO Brad Banducci said.
“Outside of solid trading in key events like Black Friday and Christmas, customers are increasingly cautious and trading down.
“Lower sales together with elevated wage inflation and clearance activity to maintain inventory health had a material impact on earnings, with H1 F24 EBIT of $54 million, down 60% on the prior year.”
Big W’s e-commerce sales declined 0.7% in the half to $283 million. However, e-commerce penetration in the half increased to 10.9% from 10.5% in the prior year.
Online sales momentum improved in the second quarter with sales increasing by 0.1% compared to the prior year.
Big W sales have continued to stay down for the first seven weeks of the second half, down approximately 6%.
“We expect an improving sales trend in Q4 as we begin to cycle material sales declines in the prior year and new initiatives land,” Banducci said. “However, H2 is typically a lower profit half for Big W and at this stage, we expect H2 EBIT to be around breakeven levels.
Meanwhile, the Big W Market was launched before Black Friday with Woolworths Group reporting strong early trading results, with new traffic being driven to the Big W website.
In partnership with MyDeal, Big W Market now has over 20,000 additional products. To support this, Big W launched its first stand-alone centralised e-commerce fulfilment solution in partnership with NP Fulfilment in Eastern Creek, Sydney.
Big W total store numbers remained unchanged at 177. Sales per square metre decreased by 3.0% reflecting lower sales.
Overall sales for Woolworths Group, which includes its supermarket chain Woolworths, were up 4.4% to $34.6 billion, with group EBIT up 3.3% to $1.69 billion.