Woolworths To Move On To Chemists' Turf
Sydney Morning Herald
Tuesday August 26, 2003
As part of its push into Australia's $9 billion pharmaceutical industry, Woolworths expects to be operating a full pharmaceutical service inside one of its supermarkets within a year and will immediately begin increasing its existing health and beauty sections in 100 other stores.
The plans were unveiled yesterday as the company announced a 16.5 per cent rise in net profit to $609.5 million for the year ended June 29 , and forecast high single-digit sales growth and low double-digit earnings growth for 2003-04.
Another share buyback is on the cards and the company is also on the lookout for big and small acquisitions.
Pharmacy is the latest in a string of sectors targeted by Woolworths. As with rival Coles Myer, liquor and petrol retailing are now significant earners for Woolworths.
The retailer is adopting a limited-service model for all but one of its pharmaceutical outlets.
``What we have done is develop a pharmacy that has got everything except the pharmacist and those very limited degree of products that you can only sell with a pharmacist," Mr Corbett said.
However, according to the Pharmacy Guild of Australia, about 70 per cent of turnover in pharmacies comes from goods listed on the Federal Government's Pharmaceutical Benefits Scheme (PBS) and another 15 per cent is from restricted items. Only a licensed pharmacist can operate a business that deals in those drugs.
Woolworths has not decided on a structure for its in-store pharmacies but it will not be buying licences.
The guild's national president, John Bronger , said Woolworths would find the pharmaceutical market tough.
``We know Woolworths is about selling products but this is a health-related industry," Mr Bronger said.
``Pharmacists don't sell cigarettes. How is Woolworths going to convince a pharmacist he can still look after the health of his customers [if he works from a Woolworths store]?" he said.
Mr Bronger also questioned whether a Woolworths pharmacist would operate services chemists now offer such as filling methadone prescriptions for drug addicts or advising customers on issues such as bowel cancer.
Woolworths shares rose 5c to $12.08 after the profit result, which met market expectations.
Earnings before interest and tax for food, liquor and groceries rose 12 per cent to $825 million, while petrol sales surged 135 per cent to $30 million.
Woolworths declared a final dividend of 21c per share with a record date of September 10.
Before its retailing joint venture with oil refiner Caltex, Woolworths already controlled about 11 per cent of the retail petrol market.
That deal will add up to 160 petrol canopies to Woolworths's existing operations, while the retailer plans to open as many as 25 new supermarkets, up to 10 Big W discount stores and six to 12 Dan Murphy liquor outlets a year.
It estimates it has already captured about 13 per cent of the Australian market for packaged liquor, but wants to grow liquor sales from $1.7 billion now to $2.5 billion.
It is also interested in newsagencies and will be watching any further deregulation in that market.
Mr Corbett said that if an opportunity arose linked to the sale of Foster's
Australian Leisure and Hospitality pub portfolio in Queensland, it would
REPEATING THE PROFIT PRESCRIPTION June 29 year 2001 2002 2003 Net profit ($m) 428.4 523.9 609.9 EPS (c) 40.2 50.2 58.1 Final dividend (c) 15 18 21