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The message delivered at Woolworths' annual meeting last week was that management is now confronting its problems. The first-quarter numbers for the 2017 financial year indicate the group is beginning to turn around.
But don't get inspired yet: Woolies is taking the first steps on a long journey. To this investor, it looks too late to sell the shares, but too early to buy.
First, consider the profit and loss account. In the 2016 financial year Woolies reported net profit after tax (NPAT) from continuing operations of $840 million, down 62 per cent on $2.3 billion reported in the 2015 financial year.

The supermarket group is now getting back to basics, and not before time. The figures quoted here are the NPATs from continuing operations – before significant items.

Those items have been very significant in recent times. In 2012, Woolies wrote off $420 million on Dick Smith Electronics; in 2013 it took various hits totalling $150 million; and in 2016 we saw the $2 billion writeoff on Masters.

So far, so good, but it's always easier to rush into a swamp than to get out again and Woolies is still wading through plenty of financial mud.
The exit from Masters is proving as painful as Napoleon's retreat from Moscow. The stores are due to close on December 11 with a net 67 stores and sites to be sold.



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