Australia's Woolworths sees 'headwinds' as consumers pinch pennies

World .
Australia's Woolworths sees 'headwinds' as consumers pinch pennies

(Reuters) - Australia’s largest supermarket operator Woolworths Ltd gave investors little cause for optimism about a rebound in consumer sentiment as it reported a 9% rise in annual underlying profit on Thursday. Chief Executive Officer Brad Banducci said that although the company was benefiting from lower interest rates and government efforts to kick-start Australia’s sluggish economy, the outlook was uncertain.

“Consumer sentiment for the first eight weeks (of full-year 2020) has been very pleasing. The question is what happens going forward... It’s still very early,” Banducci told journalists.

Woolworths said it faced “headwinds” in the current financial year from a difficult consumer environment, the cost of enterprise agreements and other cost pressures.

Woolworths shares had slipped 1.3% by 0230 GMT, while the broader market was 0.1% down. Net profit, excluding one-off items, rose to A$1.75 billion ($1.2 billion) in the year ended June 30, from A$1.61 billion a year earlier, matching analyst expectations according to IBES data from Refinitiv.

Riding on stronger sales in the second half, comparable sales in the Australian Food segment rose 3.1% in the year, while total revenue from continuing operations climbed 5.3% to A$59.98 billion. Woolworths’ results contrasted with rival Coles Group , which last week reported a drop in annual profit amid a discounting war.

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