The Woolworths Group Ltd (ASX: WOW) share price is down today as the Australian Financial Review (AFR) reports the retailer is looking to purchase Oakridge Wines.
As of writing, the Woolworths share price is down 0.51% to $38.67. In comparison, the S&P/ASX 200 Index (ASX: XJO) is 0.23% lower.
Endeavour Group wants Oakridge
Woolworths’ Endeavour Group, which the company will spinoff later this year, is looking to purchase the La Trobe Valley winemaker as it faces increasing competition. Endeavour, which is both a producer and seller of wine, wants to strengthen its wine portfolio. The group’s range of wine brands include Chapel Hill, Barossa Valley, Marlborough, and Coonawarra.
Ilana Atlas and Tony D’Aloisio, owners of Oakridge, both declined to comment when approached by the AFR. Endeavour likewise did not respond to the rumours.
Endeavour, which owns BWS, Dan Murphy’s, and Woolworths’ hotel and hospitality venues, was initially supposed to demerge from the supermarket giant in 2020. The COVID-19 pandemic forced the company to delay the move for at least 12 months.
The AFR is also reporting the spinoff may not even happen at all. Instead, private equity firms Carlyle Group and BGH Capital are “considering making offers” for $13 billion business. Woolworths may not take this deal, however, to avoid a hefty capital gains taxbill.
Woolworths financial performance
In its FY21 half-year report, Woolworths reported a 9.4% jump in gross profit on the prior corresponding period (pcp). Revenues were up 10.5% on the pcp to equal $35.8 billion.
Earnings per share (EPS) came to 90.5 cents – a 28.1% lift on the pcp.
Earnings before interest, tax, depreciation and amortisation (EBITDA) was up 8.7% at $3.4 billion for the six months ending 31 December 2020.
For Endeavour Group, sales for the period totalled $5.7 billion – up 19.0% on the pcp. The group’s EBITDA came in at $564 million, 21.6% higher on the pcp.
Woolworths share price snapshot
The Woolworths share price has been trending downwards for the last month or so. During January and February, Woolworths hit its 52-week record high share price of $42.05. One year ago, shares in the company were swapping hands for $36.05. In percentage terms, the share price has increased by 7.18% over that time.
Woolworths has a market capitalisation of $48.9 billion.
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Motley Fool contributor Marc Sidarous has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of Woolworths Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.
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