Woolworths posts £66m loss as sales slump

Losses at struggling Woolworths widened today after sales tumbled as it faced continued pressure from supermarkets, specialist shops and the internet.

The one-time giant of the high street posted pre-tax losses of £66.8 million in the first half of the year compared with losses of £36.2 million in the same period of 2005.

It came as like-for-like sales fell 8.3%, although Woolies traditionally does worse in the first six months of the year because of its heavy reliance on Christmas trading.

Woolworths has faced stiff competition from supermarkets such as Tesco and Asda as they move into non-food ranges, while sales have also been hit by the rapid growth of shopping online, with stores such as Amazon threatening sales of books, CDs and films.

The company said today that sales in the 26 weeks to July 29 were further hit by the football World Cup and the heatwave in July, which dragged shoppers away from the high street.

The hot weather improved sales of outdoor ranges but hit its key toys and chocolate market. Woolies also said there were weak sales of music and DVDs.

However, in the last seven weeks, like-for-like sales were down only 3.5 per cent, marking a recovery in its fortunes.

And chief executive Trevor Bish-Jones said he expected a better performance in the second half of the year.

Woolworths is undertaking a major store refitting programme and also plans to turn itself into a place for "kids and celebrations" by concentrating on birthday cards, Halloween outfits and Easter eggs.

The transformation will include the roll-out of its children's Ladybird clothing range, with 92 of its 800 sites operating a "shop within a shop" for Ladybird by Christmas.

Mr Bish-Jones said a key driver of growth would be its new home catalogue which will be available in stores by the end of next month with more than 5,500 products available to order by phone, online or in a shop.

Woolworths is setting up internet access points and catalogue shopping areas in its stores as it looks to create a "mini-Argos".

Mr Bish-Jones said the second half of the year would be "crucial" for Woolworths but added that he was "relatively relaxed" about analyst forecasts of full-year profits of between £41 million and £42 million.

Despite the slide in sales, the 97-year-old group remains the UK's eighth largest non-food retailer.

Mr Bish-Jones said: "We are working to get the business in shape pre-Christmas.

"At this time of year it always looks like we have a mountain to climb but we usually just about get there.

"It was a difficult first half for Woolworths but as ever with the group it is still all to play for in the second half."