This report is to present the financial strengths and weaknesses of Woolworths Limited and Metcash to make recommendations to the potential investor.
Woolworths Limited (Woolworths) is a diversified retailer, engaged in operating supermarkets, petrol stations, general merchandise stores and hotels. The company’s product portfolio includes grocery, general merchandise, consumer electronics, liquor, beverages and fuel. It offers private label and branded merchandise to its customers and operates stores under several banners. It operates 2,330 stores in supermarket division, 577 stores in general merchandise division and 284 hotels. The company, along with its subsidiaries, principally operates in Australia, New Zealand, Hong Kong, China and India. The company is headquartered in New South Wales, Australia.
Metcash Limited is Australia's leading wholesale distribution and marketing company specialising in grocery, fresh produce, liquor and other fast moving consumer goods.
Metcash upholds the interests of the independent grocery, liquor and hardware sectors through its core competencies of buying, merchandising, marketing, brand building, distribution logistics and warehousing.
Woolworths have a great responsibility to satisfy millions of people all across Australia. In about 810 stores, there are a minimum of 14 million customers every week. To satisfy these customers the company make sure they offer customers the freshest of commodities for best prices. The company is looking forward to achieve this goal by increasing the interaction with the suppliers and working for more efficient ways to maintain the best prices. More training are continually provided to the employees to ensure the customers are satisfied with the environment the company has to offer. Woolworths had an increase of 4.2% on sales which represented a $2.1 billion. Moreover, their approach to international market esp. TATA from India has produced sales of $252 million as compared to $187 last financial year. (Gardner, b 2010)
(Source: FY Report 2011)
There are 4 company pillars in Metcash, which are IGA Distribution, Australian Liquor Marketers, Campbells Wholesale and Mitre 10.
With the support of its customers, independent retailers, Metcash is the 'third force' in the Australian grocery retailing market.
Good long-term credit ratings
They have successfully maintained their financial strength and flexibility as reflected in the maintenance of their strong long-term credit ratings for Standard & Poors (A- since 2001) and Moody’s (AAA since 2005).
Strong sales revenue performance
Ranked 26th globally, and 3rd in Asia Pacific, in the 2010 Deloitte Touche Tohmatsu Global Powers of Retailing report based on annual sales revenue.
Steady increase in operating cash flows.
Balance sheet remains strong, generating higher cash flows and returning more capital to shareholders. Cash flow from operating activities was up 8.7% on the previous year.
Excellent presence in Australia and New Zealand
With 3199 stores and hiring of 188,065 employees.
Large group of shareholders - 419,304.
Committed to transparency
- Woolworths report their ESG performance annually in accordance with Global Reporting Initiative (GRI) guidelines and their reports are independently verified.
- 2009 and 2010 reports have achieved GRI A+ rating for completeness of disclosure
– Association of Chartered Certified Accountants (ACCA) awarded their CR reports as best report in the retail sector for the past two year
Responsible Corporate Governance
Over the past financial year, a comprehensive review of Woolworths corporate governance policies and practices has been undertaken to ensure that the Company maintains high standards of...