Woolworths warns on profits woe

RETAILER Woolworths has warned full-year profits will fall short of its target, triggering a sharp sell-off in its recently-floated stock.

The group, chaired by former Railtrack head Gerald Corbett, blamed previous overstocking and tough competition over the crucial Christmas season.

But it added it was still set to hit its debt-cutting and de-stocking targets for the year ended 2 February. Woolworths has also recruited Trevor Bish-Jones, currently managing director of Currys, Dixons' electrical goods chain, as its first chief executive.

Woolworths floated last August following its demerger from Kingfisher. The stock tumbled 14% to 36 3/4p.

Sales rose just 1.1% for the nine weeks to 5 January. The core Woolies business - accounting for around 80% of revenues - had suffered lower profitability and volumes, with sales off 3.5%, also hit by lower cellphone sales.

'The performance of the main chain shows how much work there is to do to reinvigorate its position in the eyes of the consumer and improve retail disciplines,' Corbett said.

Company broker Credit Suisse First Boston has slashed its profit forecasts by 67% to £15m for the current year, and by 30% to £53m for the year after.

Woolworths has long been struggling with unsold stock following over-optimistic buying. The group said it had around £120m less stock on 5 January than a year ago. While some of this would reverse over the next few weeks, it said it would hit its target of £100m less stock at its financial year-end.

Recent reports have suggested the de-stocking has clogged up Woolworths' shelves, making it unable to provide products - particularly in music and DVDs - customers wanted.

Bish-Jones, 41, will have a basic salary of £350,000. He joined Dixons in 1994 after 13 years at Boots.