Woolworths shares rise as distribution centres reopen
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More news: Woolworths shares lifted at market open on the ASX after the supermarket group secured enterprise agreements with four of its distribution centres, ending 17 days of strike action.
Shares were up 1.6% to $30.39 by 10:40am AEDT, having shed nearly 20% since January.
E&P Capital retail analyst Phillip Kimber said that the resolution is "positive", with an average wage increase within E&P's expected growth levels of around 4% per year.
Kimber noted that the sales and EBIT impacts from the strikes are "clearly one-off in nature" and E&P will leave its underlying forecasts unchanged until further clarity is provided in February.
Woolies distribution centres reopen after 17 days of strikes
The news: Woolworths has confirmed the reopening of four of the distribution centres that closed due to indefinite strike action earlier this month.
The numbers: The supermarket giant said it has secured new enterprise agreements with the distribution centres following 17 days of strikes, impacting store services across Victoria, ACT and parts of NSW.
Woolworths said sales at its Australian food business have been negatively impacted by around $140 million up to 8 December.
The estimated direct one-off negative impact of the dispute to date on Australian food EBIT is between $50 million to $60 million, reflecting the impact of lost sales, additional transport and supply chain contingency costs, and elevated levels of stock loss.
Woolworths' new enterprise agreement offers, which were endorsed by the United Workers Union on 7 December, provide team members with wage increases over three years of around 11% in total.
The context: The supermarket group said that team member concerns about performance metrics have also been addressed.
While all sites are now operational, Woolworths expects there will be further sales and earnings impacts into the second quarter, due to the time and effort required to rebuild stock levels at the distribution centres and stores ahead of the Christmas trading period.
The company said the full extent of the one-off financial impact is currently unknown, while the one-off impact for the first-half of the year was not factored into the forecast earnings range provided in October.
What they said: "We are fully focused on restoring stock levels and getting products to stores where they are needed most, with stock levels to gradually improve as we seek to provide customers with a great shopping experience this Christmas," Woolworths group CEO Amanda Bardwell said.
"We would once again like to apologise to our customers for this disruption and thank them for their support."
The sources: ASX announcement, E&P Capital research
