Sales for the year were $3.8 billion, a decrease of 2.8% on the previous year with comparable sales decreasing 3.3%. After a disappointing Q3’16 sales performance, comparable sales turned positive in Q4’16 as we cycled weaker sales in the prior year. Our focus in the second half was on retail execution, clearing excess inventory and implementing our new operating model for the business.
The best performing categories in the second half were Children’s Books, Toys, Party and Menswear. Apparel sales continued to be challenging due to clearance activity and a winter fashion range that did not resonate with our customers.
The 210 bps gross margin decline reflects the impact of clearance activity, particularly in the second half and the impact of an extra week of Toy Sale in FY16 compared to the prior year where sales are at a lower margin.
CODB as a percentage of sales increased 113 bps on the prior year, driven by lower sales limiting the ability to fractionalise costs. While support office costs were well controlled, increases in store running costs on lower gross profit dollars resulted in a loss of $14.9 million for the year.
Funds Employed declined by 26.2% to $555.2 million reflecting the balance sheet impact of significant items 1 and a strong focus on inventory.
|BEFORE SIGNIFICANT ITEMS1||FY16
|Gross Margin||(%)||31.69||33.79||(210) bps|
|EBIT to Sales||(%)||(0.39)||2.84||(323) bps|
In FY16, total significant items of $4,013.7 million before tax ($2,627.8 million after tax attributable to shareholders of Woolworths) were recognised. In FY15, total significant items of $425.9 million before tax ($307.3 million after tax attributable to shareholders of Woolworths) were recognised. Where noted, profit and loss items have been adjusted to reflect these significant items.
2.8% from 2015
EBIT (before significant items 1)
113.3% from 2015