Woolworths (WHL) – Work in progress

WHL delivered pleasing results for FY21, and the property sales provided relief from its debt burden. Management revealed a new strategic framework, with a sharper market focus for FBH. While FBH needed revitalisation, we think that narrowing the target market could reduce its market potential and reduce cross-shopping opportunities from Food customers.

Food GP margins is at its lowest level since FY12, and we think Checkers is proving to be a credible competitor for the high-income customer.

We think David Jones EBIT margin improvement may not be sustainable, as Australia’s zero-infection strategy impacts trading and relief measures dry up.

While CRG staged a strong recovery off a low base, it has been losing market share over the past three years, including in the latest period.