Story of Supermarket stocks
Turnaround of BIG W to drive earnings: During Q3FY17, Woolworths Limited (ASX: WOW) reported a moderate sales growth of 3.7% year on year (yoy) to $13.8 billion, led by strong momentum in Australian food division with 5.1% yoy growth to $9.3 billion. Further, the company is expecting a significant ramp-up in supermarket renewals run-rate with 49 planned for H2FY17. Currently, the company is focusing on rebuilding sustainable sales momentum for the remaining FY17 and into FY18. However, H2FY17 is expected to be impacted by higher costs in key areas such as team incentives, depreciation and team training. Given the sales data and turnaround plan in progress for BIG W coupled with further cost efficiencies going forward, the stock is expected to witness momentum. WOW has also been able to outpace Coles recently with the latest sales result. Over the past six months has moved up 16.6% on account of strategic initiatives taken to compete in the challenging business environment.
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