UPDATE 2-Australia's Woolworths profit misses fcast, shares off
* H1 net profit up 10 pct, misses analyst forecasts
* reaffirms full-year profit, sales guidance
* shares fall 6 pct to 1-month low (Adds shares, company comment)
MELBOURNE, Feb 27 (Reuters) - Australian retailer Woolworths Ltd (WOW.AX) missed first-half profit forecasts as earnings in its consumer electronics and New Zealand businesses fell, sending its shares down 6 percent to a one-month low.
Australia's largest supermarket chain, which also owns Big W discount stores and Dick Smith electronics chains, reaffirmed its full-year profit and sales forecasts, and said trading across all businesses had been a little stronger in January and February.
Still, gross profit margins slipped in the first half.
Earnings in New Zealand supermarkets fell 8 percent before interest and tax, while consumer electronics EBIT fell 27 percent in a sign that even supermarkets, viewed as resilient in a downturn, are feeling the pinch of a weak economy.
"It's not the super-stellar exceptional result that people may have been hoping for," said BT Investment Management analyst Sondal Bensan.
"The concern for people is that maybe these businesses aren't as defensive when times do get tough. Their core Australian franchise is very resilient but New Zealand is a demonstration of what can happen in a more difficult competitive environment," he said.
Woolworths shares have significantly outperformed the broader market .AXJO, which is down about 10 percent this year, on expectations the retailer will benefit as consumers become more price conscious and overall retail sales slow.
Shares in Woolworths, which hit a 3-month high earlier this week to be up about 21 percent from a low in November, fell 6 percent to a$26.32 after the result, the lowest since Jan. 28.
NO RECESSION YET
Australia's economy has so far clung to growth while other developed economies have slipped into recession. Retail sales, adjusted for inflation, notched up the biggest increase in a year in the fourth quarter as Australians kept shopping thanks to government hand-outs and falling interest rates.
This has benefited both Woolworths and rival Coles, bought by Wesfarmers Ltd (WES.AX) for A$19 billion in late 2007.
Still, Australians are anxious about losing their jobs, with unemployment at a two-year high. Sharp losses in share values and retirement accounts are weighing on consumer confidence.
Retailer Harvey Norman (HVN.AX), whose electricals chains compete with Woolworths' Dick Smith unit, reported a 29 percent fall in first-half underlying profit on Friday and cut its dividend, citing challenging trading conditions.
Woolworths spent almost A$1 billion ($652 million) in the half year to improve stores and strengthen its lead over Coles.
"The second half might be good, but beyond that I don't think they're going to do well enough to justify the level of investment that's going into them this year and next. The capital intensity is increasing quite a bit but the returns may not come through," said Bensan.
Woolworths' net profit rose to A$983.3 million in the 27 weeks to Jan. 4, from A$891.3 million a year ago, below forecasts for just over A$1 billion in an average of four analysts polled by Reuters.
Woolworths expects full-year net profit after tax to grow 11-14 percent on a basis of 52 weeks, or 9-12 percent on a 52 versus 53 week basis. Annual sales would grow 5-9 percent, excluding petrol.
"Businesses like ours in basic commods ... will continue to do well," CEO Michael Luscombe told reporters on a conference call. "We're very comfortable that we'll deliver in the range we've talked about." ($1=A$1.55) (Reporting by Miranda Maxwell, editing by Jonathan Standing & Dhara Ranasinghe)
