The company’s shares are in the red after it announced some significant items to be included in FY21 results.
The post Woolworths (ASX:WOW) share price slides following update appeared first on The Motley Fool Australia. –
Woolworths Group Ltd (ASX: WOW) shares are down today following an announcement of several big-ticket items to be included in the company’s 2021 financial year results. The company’s announcement also included a supply chain update.
At the time of writing, the Woolworths share price is trading at $42.49 – 1.98% lower than yesterday’s close.
Today isn’t a great day for the broader market either. The S&P/ASX 200 Index (ASX: XJO) is currently down 0.58%.
Let’s take a look at today’s news from Woolworths.
Woolworths has unveiled the significant items it expects to include in its 2021 financial year results. Together, these items will see Woolworth’s report a pre-tax net gain of $57 million for its significant items.
Woolworths will be reporting a non-cash gain of $220 million from its investment in data science and analytics company Quantium in its upcoming financial year results.
Earlier this month Woolworths announced it increased its stake in Quantium from 47% to 75%.
The Quantium investment is the only non-cash gain from significant items Woolworths expects to include in its 2021 financial year results.
The company also expects to report $163 million of costs and impairments from significant items.
These will be resulting from transaction costs, its New South Wales fresh food supply chain, and a non-cash impairment charge due to a downturn in some of its Metro stores.
Additionally, due to a downturn in customer traffic caused by COVID-19, Woolworths will record a $50 million non-cash impairment charge for the leases of 13 Metro stores in CBD locations.
Woolworths CEO Brad Banducci said changing customer patterns over the last 15 months drove the need for the impairment charge.
Supply chain update
Woolworths also announced its fresh and chilled food supply chain in NSW is nearing capacity.
Currently, Woolworths’ fresh and chilled products sold in NSW are transported from a facility in Minchinbury and two third-party facilities. However, soon these won’t be large enough to house Woolworths’ operations.
As a result, Woolworths will build a new 76,000 square metre facility.
The facility will supply fresh and chilled food to more than 280 Woolworths supermarkets in NSW.
Woolworths will close the Minchinbury facility in 2024. However, it expects to recognise $44 million in redundancy costs in its 2021 financial year results due to the facility’s future closure.
The company won’t be reporting the cost of the new facility this financial year. However, it’s expected to cost $400 million. Construction of the facility is expected to begin in 2022 and to finish in 2024.
Woolworths share price snapshot
The Woolworths share price is up by around 8% year to date. It has also gained almost 17% since this time last year.
The retail giant has a market capitalisation of around $54 billion, with approximately 1.2 billion shares outstanding.
Should you invest $1,000 in Woolworths right now?
Before you consider Woolworths, you’ll want to hear this.
Motley Fool Investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now… and Woolworths wasn’t one of them.
The online investing service he’s run for nearly a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.* And right now, Scott thinks there are 5 stocks that are better buys.
*Returns as of May 24th 2021
Woolworths (ASX:WOW) shareholders vote in favour of Endeavour demerger
Latest ASX shares to be hit by a broker downgrade today
Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned.
The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.