WLW Woolworths

RNS Number:8542L
Woolworths Group PLC
16 January 2008

                              WOOLWORTHS GROUP PLC

                          CHRISTMAS TRADING STATEMENT





Woolworths Group plc is updating the market on the trading performance of its
three core businesses for the 49 weeks to 12 January 2008.



Total Group sales increased by 11.2%.  This performance came against a backdrop
of volatile and highly competitive markets.  Across each of the businesses, we
have worked to optimise profit delivery and anticipate that year-end profits
will be ahead of the prior year and within the range of current market
expectations.



2entertain



The sales momentum at 2entertain continued throughout the Christmas period.
International sales continued to be driven by Planet Earth in the US.  Little
Britain and Dr Who were major contributors in other world markets.  In the UK,
the two notable successes were the Clarkson Supercar Challenge and Richard
Hammond's Top Gear interactive DVD.  Cumulative sales for the 49 weeks increased
by 11.7%, and we anticipate good translation through to net profitability.



Entertainment Wholesale



Cumulative sales for EUK and Bertrams for the 49 weeks were 46.7% ahead of the
prior year, including the effect of acquisitions and new customers.  This has
been a year of transformation within EUK as it has taken on new customers and
integrated acquisitions.  The product mix supplied by EUK has also shifted
significantly on the back of the explosive growth in the games market and the
decline in sales of CDs.  Maintaining customer service while managing through
this change has resulted in higher than anticipated operating costs in the
period, alongside a negative margin mix effect driven by the higher proportion
of lower margin games hardware sales.  These factors will, to a limited extent,
depress EUK's profitability in the current year.  Going forward, we anticipate
returning to normal efficiency levels and for the adverse mix effect to
naturally reduce as the installed games hardware base drives the associated
higher margin software sales.



Woolworths Retail



It is anticipated that Woolworths Retail will return to profitability in the
current year.  While the absolute level of profitability will be low, this is an
important reversal of the prior year loss and will have been achieved against a
background of tough competition and reduced consumer confidence.



Key to the improvement has been robust control of costs and active management of
the sales mix and margin delivery.  Like-for-like sales for the 49 weeks are
-3.2%.  The fall in sales reflects the strategy of focussing on profitable
sales.  This approach had the greatest impact in the electrical product
categories where there was fierce discounting across the sector.  The reduced
level of electrical sales (eg. flat screen televisions and pc's) accounts for
approximately half the reduction in like-for-like sales and also held back
top-line sales growth in our multichannel business where we have concentrated on
building a profitable and sustainable business.



Anticipating weakening consumer demand, we continued to focus on tight control
of inventory and at the end of the first week of the January sale, the business
had �61m less stock than the prior year, having achieved high levels of sell
through on seasonal ranges.  Tight control of stock also reduced exposure to
markdown, which was a contributory factor to continued margin improvement.  The
anticipated margin improvement for the year will be at least 100 basis points.
The year-on-year reduction in stock will lessen during January as we set up for
the earlier Easter and the launch of the next phase of the Worth it! range.



Further contributory factors to the improved profit performance in Woolworths
were the continued exploitation of our property portfolio where store openings,
disposals, cut downs and sub-lets continue to generate positive contributions
and the full year benefit of the previously announced asset relifing.



Outlook



We continue to be concerned about the underlying level of consumer confidence
during 2008.  As such we will continue to be cautious in our planning, placing
emphasis on cost control, margin control and cash generation.



Commenting on Christmas trading, Trevor Bish-Jones, Chief Executive, said: "
Christmas was a very challenging time for the Group.  However, in spite of
volatile and highly competitive markets, all parts of the business took steps
forward.  We are pleased that the progress made across the Group through this
year is expected to lead to an improvement in profitability, including
Woolworths Retail returning to profit."





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




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