Woolworths Share Price Falls Despite Special Dividend

By ,

Woolworths Group Ltd [ASX:WOW] share price fell shortly after opening this morning, after revealing their final profit and dividend for the 2018 financial year.

Shares of the supermarket are currently trading at $28.80, down 2.7% from Friday’s closing price.

Woolies are referring to it as the ‘year of business improvement’, stating that transformation is on track, with the group’s net profit after tax up 12.5% from last year, reaching $1.724 million. But most importantly for shareholders, the supermarket has announced a dividend payout of 103 cents per share, including a special dividend of 10 cents, up 22.6% from last year.

Why Woolies increased its dividend

The increase in dividend has stemmed from strong momentum across all businesses over the past 12 months. With group sales up 3.4% and earnings before interest and tax (EBIT) up 9.5%, the group is very happy with its progress.

Brad Banducci, Woolworths Group CEO said that considering the improved trading performance and balance sheet strength throughout the year and the recent introduction of Petrol alliance with Caltex, the Board decided to offer shareholders the special dividend.

This special dividend and the removal of the 1.5% Dividend Reinvestment Plan discount announced in February, reflect our commitment to disciplined capital management, including distribution of franking credits to shareholders as appropriate. Further capital management will be considered as part of a successful exit of our Petrol business.

Free Report: The five most potentially lucrative income stocks trading on the ASX right now. Get all the info here.

But why did the share price drop?

While the company had strong overall performance, its discount department store Big W ran at a loss of EBIT of $110 million.

In addition, the first-quarter of 2018/2019 food sales were slowed to 1.3% — the slowest rate in nearly two years. Woolies stated that the impact is due to the phasing out of single-use plastic bags, Coles’ popular Little Shop promotion, the deflation of fresh food price and the cycling of their Earn and Learn program in the previous year.

Despite the rough start to the year, management are confident that sales momentum will pick up over the course of the half.

Mr Banducci said:

Our customer satisfaction metrics (VOC) are broadly back to the levels prior to the removal of single-use plastic bags, including Time in Queue. Our overall brand metrics have also continued to improve relative to our competitors, including price perception, brand preference and quality of fresh. These customer and brand scores along with our strong trading plans, give us confidence in the critical run into Christmas.

Regards,
Matt Hibbard

For Money Morning

PS: Dividends are a powerful wealth-building tool. If you’re interested in finding out which Aussie stocks pay the highest dividend, our income specialist, Matt Hibbard reveals five stocks he calls ‘…the best dividend paying stocks on the Aussie market today’, in his FREE report. Find out which stocks he picked by downloading his report ‘Top 5 Dividend Stocks 2018’ here.

About Matt Hibbard

Rigged! How to Invest in the Lockdown Economy

‘Freeman points out that about 40 per cent of profits of companies on the ASX are generated offshore, insulating them from the worst of the lockdowns.’

Coles Share Price versus Woolworths Share Price: Which is Better?

Two supermarket heavyweights, Coles Group Ltd [ASX:COL] and Woolworths Group Ltd [ASX:WOW] have avoided massive sell-offs in this downturn. Today we look at the Coles share price in comparison with the Woolworths share price, to see which could be sturdier as the months in self-isolation progress.

Woolworths Share Price Down: More Sales than Coles, Owes a Decade of Back Pay

Woolworths released potentially conflicting updates on the ASX this morning, leading to a small loss for the Woolworth’s share price. It will be an interesting day of trading today for Aussie grocery leader Woolworths Group Ltd [ASX:WOW]…

Is Coles’ Share Price Uptrend Signalling a Slow-Down?

The share price of Coles Group Ltd [ASX:COL] has been on a solid run since hitting a 52-week low of $11.12 on 21 February. Before market open today, the grocery giant was only 29 cents shy of its 52-week high, sitting at…

Woolworths Share Price Rises on Merger News | ASX:WOW

Today, Woolworths Group Limited [ASX:WOW] announced an agreement to merge Endeavour Drinks and ALH Group [ASX:AKH] into a combined entity, set to be named ‘Endeavour Group Limited’.At time of writing, Woolworths’ share price is trading at $33.83, up 2.78%. 

Profit Guidance Sends Caltex Share Price into Nosedive

Fuel supplier and convenience retailer Caltex Australia Ltd [ASX:CTX] has had its share price value cut by almost a quarter this morning. In their unaudited profit guidance released this morning, Caltex have forecast some worrying figures.