WLW Woolworths

    RNS Number : 0576A
  Woolworths Group PLC
  29 July 2008
   

    Pre-Close Trading Statement
    29th July 2008


    Woolworths Group plc is today updating the market on trading for the period to 26 July 2008 ahead of entering its half-year close
period.

    Group sales for the 25 weeks to 26 July 2008 were down 3.1%.

    Sales in Woolworths Retail for the 25 weeks were down by 3.2%. Since last updating the market, Woolworths Retail like-for-like sales for
the six weeks to 26 July have fallen by 6.7%.  

    Due to the continued strength of the entertainment market, a larger proportion of sales came from lower margin CD's and DVD's, 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 approximately 125 basis points below last year.

    We expect to complete the disposal of three of the four stores where the leases have been assigned to Waitrose on 31 July 2008, with the
fourth store completion being due in the late summer.  Approximately �18m will be received on completion of the three stores with the
balance of approximately �7.5m on completion of the fourth store.

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

    The programme to enhance operating efficiency following last year's major changes at EUK continues to progress well.

    2 entertain, the group's joint Venture with BBC Worldwide, continued to trade strongly with sales for the 25 weeks up 12.8% compared
with last year.  

    Having refinanced in January 2008, the Group's four-year Asset Based Lending (ABL) and other facilities continue to provide it with
secure, medium term finance which flexes with the seasonal requirements of the businesses.

    Strategy

    The Board is continuing its search for a new CEO to take the group forward on to its next stage of development. In the meantime, the
Board has undertaken a review of the group's businesses. The preliminary conclusions, confirmed by a study carried out by a leading firm of
strategy consultants, confirms the Board's belief that there is a considerable opportunity for the Group to build a sustainable value retail
proposition based primarily on its small to medium sized stores. The review has also highlighted opportunities for improved stock management
in the areas of ordering, weeks of stock cover held and availability. It is early days but the Board has started to put in place the
necessary changes which over time will allow the retail business to be more focussed on this positioning. Further details on the issues and
progress in addressing them will be included with the Group's Interim results on 17 September 2008.

    On EUK, the Board remains of the view that this is a strong and profitable business with good growth prospects. In order to further
improve the future profitability of EUK, the decision has been taken to mark down and clear a proportion of the business's catalogue stock.

    Having carried out a detailed review of our options in relation to our 40% holding in 2 entertain, the Board has concluded that it would
not be right to crystallise value at this time. We believe greater value over time will be obtained by retaining our stake in this
successful business.


    Richard North, Chairman of Woolworths, said:

    "The Board of Woolworths is continuing the search for a new Chief Executive to take the group on to the next stage of its development.
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."



    For further information please contact:
 Stephen East, Group Finance Director    020 7479 5179
 Susanna Voyle, Tulchan Communications   020 7353 4200


This information is provided by RNS
The company news service from the London Stock Exchange
 
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