The Age.com.au: Woolworths under the pump

By Leonie Wood

June 4, 2004

Soaring world oil prices have not only cost motorists at the petrol pump - Australia's largest supermarket chain, Woolworths, has conceded its sales have been hit.

Asked if the rise in petrol prices in recent weeks had magnified the sales growth difference between the rival retailers, Woolworths chief executive Roger Corbett said: "Yes, for a period of time, a very limited period of time, there is an impact."

He pointed to the bigger Coles-Shell network of petrol outlets (590 compared with 460 in Woolworths-Caltex) and the lack of branding on Woolworths-Caltex sites.

Mr Corbett, whose Woolies group also owns Safeway supermarkets in Victoria, said the impact of the Coles Myer fuel offer with Shell had shown up in the 2003-04 second quarter, but the current and final quarter of the financial year would be the worst.

"I know that when we go through this period of time where there is a comp-store swap because of these petrol stations (that) we will come under some pressure and criticism," he said. "I expect that and understand that. The really important thing is where we are growing the business for the future."

He said Coles Myer's offer was excellently executed and comprehensive and it would have some dynamic effect. But he contended it was expensive for Coles Myer.

"Because what they have done is locked themselves in a long-term arrangement, taking all the retail leases - and therefore all the retail risks - of a vast network," he said.

"Fundamentally, I am not concerned about the short-term impact of petrol, because it is something that I can't change. The only things I am interested in is the strategic positioning of Woolworths moving forward as a growth stock."

http://www.theage.com.au/articles/2004/06/03/1086203564928.html?oneclick=true