Woolworths slashes dividend in 'difficult trading environment'
Woolworths has slashed its dividend and reported a drop in annual pre-tax profit to £11.7 million from £16 million last year.
The board is recommending a final dividend of 0.17p per share compared to last year's 1.34p, taking the total dividend for the year to 0.6p per share, in contrast to last year's 1.77p.
Chairman Richard North, said: "Against a difficult trading environment we have managed substantial change across the group as a whole.
"Nonetheless, the board has taken the decision to cut the dividend.
"The board believes that payment of a dividend at this level represents an appropriate balance between providing a return to shareholders and preserving the financial flexibility necessary to support the plans and ongoing development of the business, over both the short and longer term."
Chief executive Trevor Bish-Jones added: "It is early days and the retail environment is likely to remain challenging in the current year. We will, therefore, continue to manage the business tightly."
For the year ended February 2nd 2008, total group revenue from continuing operations was £2.97 billion, an 8.5 per cent increase over the prior year.
Like-for-like sales at Woolworths were down 3.2 per cent, but the retailer said this was because it no longer pursued unprofitable sales and margins are up as a result.
Half of the sales lost were electrical and computing products, which Woolworths said have very low margins due to the ease of price comparison. Woolworths was also hit by the bad publicity attached to the failure of Farepak in 2006, which led to a dramatic fall in voucher sales.
The group's debt increased from £113 million to £246.3 million, reflecting the full year effect of the THE and Bertram acquisitions to boost Woolworth's entertainment business.
Woolworths's outlook is cautious for the rest of the year. The group said it will not expand its sales line and will reduce its exposure to larger, over-spaced stores.