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Woolworths pulls $2bn profit amid supply chain investment

Woolworths records a more than 10 percent increase in profit and unveils plans to improve its supply chain operations

By Brad Gardner | August 26, 2010

Woolworths has recorded a more than 10 percent increase in profit to $2 billion, as it unveils plans to improve its supply chain operations.

The supermarket giant today released its final profit report for last financial year. The 10.1 percent rise was propelled by sales of $51.6 billion – a 4.2 percent increase.

Woolworths CEO and Managing Director Michael Luscombe says the result is at the higher end of what the company predicted and labelled it a good result in a challenging trading period.

Woolworths Chairman James Strong says the company’s financial position helped it offset the effect of the global financial crisis.

“The year has seen significant global economic challenges that will continue in the near term,” he says.

Crediting the financial performance of its supply chain for its strong bottom line, the company has announced work has started on upgrading the software and hardware of its national DC in Victoria to improve the pick rate efficiency and reduce costs. The project is expected to be finished before July next year.

According to the report, Woolworths will also tinker with its DC replenishment program StockSmart and its store replenishment system AutoStockR to develop a next generation model capable of cutting costs across its stores, DCs and transport divisions.

Construction of a new regional DC in Tasmania will begin later this year, while the development of a new centre for Big W in Sydney has started.

It follows the opening of the Brisbane DC last year, which has been credited for improving Woolworths’ liquor distribution network by linking with the existing Melbourne and Sydney facilities.

“The network is now well positioned to support continued growth of our liquor business,” the profit report says.

Woolworths’ meat processing and distribution facility in Western Australia will also be developed to improve efficiency, while the company progressively introduces its Metro Transport Model program to boost capacity planning, asset optimisation and freight tracking.

Woolworths has also developed a new rail strategy on the Adelaide to Northern Territory corridor to deliver an ‘end to end’ solution for goods. It is now focusing on doing the same on the east-west and north-south corridors this financial year.

It expanded its presence in the fuel market last financial year by opening another 20 petrol stations to increase its share to 561 by the end of the financial year. It also opened 157 new stores, with 44 of them coming in the final quarter of the year.

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