Woolworths banks continued digital growth

Woolworths has reported strong growth in its WooliesX business, as the retail giant’s performance was dragged to a $781 million loss by a $1.5 billion write-down of its New Zealand business.

The retailer reported [pdf] revenue of $34.6 billion for the half year ended December 31, up 4.4 percent on the first half year of the prior year, but revenue from the WooliesX digital operation forged ahead by 25.7 percent to over $4 billion.

Outgoing CEO Brad Banducci hailed the digital performance, noting that average traffic to the group’s digital platforms was up 17 percent over the first half of 2023, and 675,000 customers joining the Everyday Rewards program (now under the Everyday X umbrella).

Everyday X’s growth took its membership to 9.4 million, with 28 percent growth in Everyday Rewards app users.

WooliesX earnings before interest and taxation (EBIT) was up 132.3 percent from $72 million to $168 million, and the operation delivered 80 percent of EBIT growth in Woolworths’ Australian food business.

Banducci said this is “a reflection on the capabilities and investments the [WooliesX] team have had, including advanced analytics.

“Woolworths and Coles are two of the most productive retailers in the world … when it comes to e-commerce, we are in the top quartile in productivity worldwide,” he added.

The eComX B2C segment grew its active customer base by 14 percent to more than a million, with sales up 21 percent; and the Cartology data-driven marketing business claimed 15 percent revenue growth.

The strong digital performance could explain why Woolies X managing director Amanda Bardwell was named Brad Banducci’s successor as CEO earlier today. Banducci’s term will end in September.

Total digital and technology capex fell between the first half 2023 and 2024: IT spend was nearly flat, up from $129 million to $131 million; while capex in digital businesses fell from $72 million to $54 million, and in e-commerce from $69 million to $43 million.

“In e-commerce, there was a lot more spend in the first half of last year, CFO Stephen Harrison said, highlighting the completion of Woolworths’ fulfillment centre in Auburn in Sydney as an example.

Banducci also said the retailer's analytics capability, served by its wiq business unit, is reaching more parts of the business.

Advanced analytics is now being tested across “30 high-priority use cases,” he said, reaching “virtually every part of our group”.