August 23, 2004

By Dirk van de Vynck

Cape Town - Woolworths, the listed clothing and food retailer, is going ahead with the expansion of its Engen convenience stores within Engen service stations, with phase one being the roll out of 40 outlets in the next 18 to 24 months.

Simon Susman, the chief executive of Woolworths, told investment analysts on Friday that the convenience store had started off with two outlets two-and-a-half years ago, before another three were added, bringing the total to five.

"The reason for the slow expansion was for both parties to see if the relationship worked well. We have come to the conclusion it does and hence the acceleration of the roll out."

The capital expenditure for the expansion will be financed by Engen.

As for the Woolworths i'Sentials pilot stores, which currently stood at four outlets in the Western Cape, turnover on average was within budget.

But on an individual level, two stores were trading above expectations and two below.

In order for the new concept to be successful, he said, the company had to become more aggressive in communicating the value proposition of i'Sentials.

Susman said the success of the pilot would be evaluated over the next six months.

Turning to the group's Country Road operations in Australia, Susman said there would be an increased focus on the company's retail function, which operated through 40 outlets.

Six new stores were planned through the course of this year and the next.

He believed that the worst was over for Country Road and that the new strategies put in place within the group had given it the right platform for future growth.

When Woolworths acquired Country Road in 1998 it was in a difficult spot, and Susman admitted that the turnaround had taken longer than they would have wanted.

The intention of upping Country Road's performance included the increased fashionability of ranges and the continued reduction of lead times, which had already been brought down from between 11 and 13 months to about seven months.

Woolworths shares closed 30c up at R7.75 on Friday, while the general retailers index was 0.27 percent higher.