Weak sales and high start up costs spiked the losses of Australia’s largest retailer Woolworths Ltd. to nearly double in the first semester of 2013.
Aggregate sales from the 31 Masters stores, its joint venture with Lowe’s Cos, reached AUD $529 million. The company, however, reported gross losses of AUD $139 million against the projected figure of AUD $81 million.
The company claimed low consumer confidence, very high wages, unrealistic sales projections and weak profits as the primary reasons for the performance.
In addition, Woolworths’ shares dropped 1.5% to AUD $33.18 in Sydney. As a result, it amended its projected net income to 5% to 6% from the previous 4% to 6%.
David Errington, Bank of America Corp’s Merrill Lynch Division analyst, wrote a letter addressed to clients dated April 26 that the company is looking at “lower growth in the foreseeable future.”
“The earnings drag from its entry into hardware is inopportune timing,” he wrote.
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