WOW (ASX) News: UPDATE 1-Australia's Woolworths cuts dividend as half year profit slides

Originally posted by savvyinvestor ↑

i like banter, just has to be a touch wittier to be worth posting rather than the dull rambling of two prolific posters that they feel entitled to do just because they have lots of posts...

its like when your boss at work feels entitled to ramble about whatever they want 'just coz they da boss'.

anyway, what do you all make of this article in the age yesterday? i think leople will jump on bulk purchases more and more as cost of living escalates and awareness rises, especially if its delivered free:

"One of the world's biggest retailers, Costco, wants to reclaim bragging rights of being 30 per cent cheaper than supermarket giants Woolworths and Coles.
Costco is 27 per cent cheaper than Coles and 24 per cent cheaper than Woolworths on a 27-product basket of basic household items, investment bank Morgan Stanley recently told clients. But the price gap had narrowed from 37 per cent, thanks to price cuts at Woolies and Coles, analyst Tom Kierath said.
Costco Australia managing director Patrick Noone said Costco was 28 per cent cheaper than the big two chains, based on an internal review of 150 to 160 fresh food and grocery products. He said he wanted to widen that gap back to 30 per cent.
"We're still comfortably ahead ... We can work a bit harder to get to 30 per cent," he said.
Mr Noone said Costco had not been troubled by Woolworths spending more than $1 billion on cutting prices over the past 18 months and Coles spending more on price last quarter than it ever had.
"Retail is always competitive ... [but] our business is going well," he said.
A Woolworths spokesman said, "We're a house of brands committed to providing our customers with great quality products at great value both in-store and online."
A Coles spokeswoman said the average customer had just $150 per week to feed their family.
"Discounts for bulk pack sizes are not new in Australian retail. However, not all customers want or can afford to buy in bulk, so Coles offers value on products of all sizes across the store."
Mr Noone also said Costco's prices were "in pretty good shape" compared with German chain Aldi.
Aldi aims to be 20 to 25 per cent cheaper on a basket of groceries than Woolworths and Coles through selling almost only high-margin home-brand products and through greater labour productivity.
Mr Noone said he was "not surprised at all" that German grocery giant Kaufland was looking for land and staff for its self-described "ambitious Australian investment and development program."
"It's a great market, and Australia does well when it has more competition. It's good for the consumer," he said. Kaufland is tipped to challenge Costco.
Pricing expert Christoph Petzoldt recently said Costco had failed to forge a strong identity in Australia, because it had not many stores and people didn't want to pay a membership fee to shop there.
Mr Noone responded that Costco was still growing and seeing profitable returns, albeit operating at lower margins than the dominant chains.
Costco generated $1.5 billion in sales in the 12 months to late August 2016, posting a $14.79 million profit. Morgan Stanley estimated it had 1 per cent of national supermarket sales.
Costco has also benefitted from its parent company – the world's second biggest retailer, according to Deloitte – investing close to $500 million into the Australian venture.
Costco has eight stores and Mr Noone said the company had no firm numbers on how many stores it wanted longer term.
He declined to reveal how many members it had, but said the average customer shopped every two to four weeks and spent more than they did at the other chains.

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Your article suggested Costco is posting $14.9m profit on their $500m investment.

The article also suggests the $14.9m profit is result of $1.5 billion in sales so about 1 percent profit.

So...I dare suggest that based on these numbers that Costco would be pretty happy to forget the Aussie market.

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Last $30.21		Change -0.110(0.36%)		Mkt cap ! $43.04B

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$30.37	$30.67	$30.13	$79.09M	2.609M

News: UPDATE 1-Australia's Woolworths cuts dividend as half year profit slides, page-58

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