Woolies surprises with £73m profits

AN £837m bid for Woolworths from Apax Partners looked a step closer today as the retailer reported better-than-expected profits, and chief executive Trevor Bish-Jones said he saw 'plenty of opportunity for further improvement' despite challenging trading conditions.

Profits for the year to 29 January rose by 4.7% to £73.1m before exceptionals, against market expectations of a small fall, on total underlying sales ahead by 4.5% to £2.9bn.

Disposal of the Big W chain has thrown up hefty exceptional items, however, leaving the pre-tax profit figure at just £9.3m against £66.7m the previous year. The group has also decided to cut its losses on the MVC entertainment business, which has 81 High Street shops. It is to close 14 of the worst-performing stores with the loss of 80 jobs.

The Woolworths chain had a mixed performance, but still pushed margins ahead by 0.4%. The group has decided to pare back its store revamp programme to 50 this year against the earlier target of 75.

The refitted stores delivered an average 6% sales growth in the first year, and 2% in the second, in line with expectations. This compares with a sales decline of 1.3% for the core chain.