The country's second biggest supermarket chain Woolworths has reported a drop in earnings despite a lift in sales revenue, and says Omicron and staff absenteeism will hit it this year.
Woolworths operates the Countdown, Super Value and Fresh Choice chains in New Zealand. Photo:
The Australian owned company said its New Zealand operations, which include the Countdown, Super Value and Fresh Choice chains, had a 12.5 percent fall in pre-tax earnings to $316 million, although revenue rose 5.8 percent to $7.56 billion in the year ended June.
Woolworths New Zealand Manager Spencer Sonn said the past year had been incredibly tough, and the company expects a material fall in earnings in the first of the new year.
"We felt the impact of Omicron later ... but it had a significant impact on our operating rhythm in the second half after already experiencing a slowing market and global supply chain challenges," he said in a video on the Woolworths website.
He said the first half of the year had benefited from lockdowns which had boosted home consumption, but sales growth had slowed in the second half because of disruptions to its supply chains and stores.
Sonn said three new facilities - a meat processing plant, fresh produce centre, and distribution centre, would improve its local supply chains.
"Looking ahead we are looking at getting back to a consistent operating rhythm."
However, a slide in the earnings presentation said New Zealand earnings for the first half of the new financial year were expected to be "materially below" the previous year, because of staffing issues and ongoing Covid-19 disruption.
There was no mention of the moves being made by the government to increase competition in the New Zealand grocery market following the Commerce Commission market study.
These include a mandatory code of conduct, ban on land banking and restrictive covenants, a grocery commissioner, and most recently a threat to force access to the wholesale operations of Countdown and Foodstuffs to allow smaller operators access to a wide range of products and fair prices.