Woolworths cuts first half losses to £35m

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The Independent Online

Woolworths announced improved half-year figures yesterday and said it looked forward to the crucial Christmas period with confidence. After difficult trading at Easter, particularly in the confectionary section, the retail group had made progress despite especially hot weather in August.

Trevor Bish-Jones, the chief executive, said diversification in product mix allowed the company to cover for changes in weather. He also said the decision to identify core customers as part of the company's strategy to make Woolworths famous for "Kids and Celebrations" had paid off with near double-digit growth. Better quality product and better stock management had also allowed the company to improve gross margins.

Last month WH Smith was forced to issue a profits warning after a poor performance in its music retailing section but Mr Bish-Jones said that reallocation of space for DVDs had helped to minimise the effect of difficult music sales.

The company reduced traditional first-half losses before tax, goodwill and exceptional items from £39.7m in 2002 to £34.9m this year.

One analyst commented that the results were in line with expectations and that no change in forecast of full-year, pre-tax profit of around £70m was necessary. He also said yesterday's 14 per cent rise in share price from 38p to 43.5p made the "tenuous but believable" bid rumours, doing the rounds last month, less likely.