Woolworths pledges to drive down costs

Woolworths has vowed to offer better prices to New Zealand consumers as it drives down costs in the market.

Chief executive Roger Corbett said yesterday that the supermarket giant would significantly reduce costs here by taking advantage of its systems and technology.

"We recognise we face a good competitor [in Foodstuffs] but we think that we're going to see good solid growth in New Zealand."

Corbett said the company planned to open more supermarkets in New Zealand and was considering new liquor outlets and perhaps general merchandise.

It has opened two new supermarkets since November, when it bought Progressive Enterprises - owner of Countdown, Woolworths NZ and Foodtown.

Since November, the New Zealand division has made $2.9 billion of sales.

Gross margin was 22 per cent and ebit (earnings before interest and tax) was $122.5 million. Trading ebit was $132 million for the eight months since acquisition.

Last September, when the company was still owned by Foodland, the New Zealand supermarkets reported record sales of $4.31 billion.

Progressive has 43 per cent of the grocery market against Foodstuffs' 57 per cent.

In a "pleasing post-acquisition performance", its comparable sales rose by 3.5 per cent in the third quarter and by 3.8 per cent in the fourth.

Overall food inflation was between 1.5 and 2 per cent, consistent with prior periods.

Woolworths said it expected its changes would take two or three years to be evident.

The Australian parent plans to streamline Progressive's systems and apply its supply chain and inventory management.

It would also investigate the viability of rolling out "new formats" including general merchandise, liquor and pharmacy lines.

- NZPA