Entertainment Not The Wonder Of Woolies

The giant Woolworth’s retail chain blamed aggressive pricing and lower sales of CDs and DVDs for a pre-Christmas profit warning issued December 5th.

Chief exec Trevor Bish-Jones pinpointed entertainment – music, films and computer games – as “the most challenging market,” with prices well below last year’s.

The news had Financial Times musing on whether Woolworth shareholders were dreaming of the day they’d wake up and find a positive Christmas trading statement at the end of their beds.

So far, they’ve only had a statement that said: “We still have the key Christmas trading weeks to come, which will determine the final outcome for the year. However, given the sales performance of the last two months, it is appropriate to be cautious.”

Bish-Jones reckons this year’s gross takings to be about a week behind last year’s, increasing speculation that Icelandic retail investor Baugur, which owns 10 percent of the 800-strong store chain, would push ahead with a restructuring plan in the new year.

Analysts had been expecting profits to come in at between £28 million and £47 million, but they’re now slashing that to between £22 million and £25 million.

Woolworth shares lost nearly 7.5 percent to close at 34 pence, although it could have been worse if not for the continued speculation that somebody’s about to bid on the whole chain.

A few analysts appear stymied as to how the company and its “That’s The Wonder of Woolworth’s” slogan hasn’t already been swallowed up.

In the U.S., where its parent company originated, the name no longer exists. In the last 1990s downturn, Woolworth’s became Footlocker.

— John Gammon