Woolworths down at half time

High Street chain reports sales down by 3.1 per cent for half year.
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As it enters its half year close period, Woolworths has revealed this morning that group sales for the 25 weeks to July 26th were down 3.1 per cent.

Sales in Woolworths Retail for the same period were down by 3.2 per cent. Since last updating the market, Woolworths Retail like-for-like sales for the six weeks to July 26th have fallen by 6.7 per cent.

Due to the continued strength of the entertainment market, a larger proportion of sales came from lower margin CDs and DVDs, with a lower proportion from higher margin warm weather outdoor products and clothing.

This, together with additional clearance activity, means that the margin rate in the first half is expected to be 125 basis points below last year.

In Entertainment UK (EUK) and Bertrams third party sales for the 25 week period were down 1.0 per cent compared with last year. EUK has successfully renewed its contract to service WM Morrison with chart CDs, DVDs, computer games and books until 2011.

Meanwhile, 2Entertain, the group's joint venture with BBC Worldwide, continued to trade strongly with sales for the 25 weeks up 12.8 per cent compared with last year.

"The board of Woolworths is continuing the search for a new chief executive to take the group to the next stage of its development," said Richard North, chairman of Woolworths. "In the meantime, we have begun the detailed work that needs to be carried out to rebuild the retail business around the core of more profitable small and medium-sized stores.

"Our EUK and 2E businesses are continuing to trade well. The retail business, however, has seen a marked worsening of conditions in June and July in an increasingly competitive market.

"This is reflected in the sales figures for the last six weeks. In addition, sales over the first half as a whole have been achieved with a disappointing margin performance.

"Looking ahead we remain cautious about the outlook for retail given the background of a weakening consumer economy. But we have strong operational management in place in all parts of the business who are working hard to ensure that the needs of all our customers - both wholesale and retail - continue to be met."


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