Officeworks reports $1.57 billion in sales: inside the record result

Officeworks reported a record full year result today of $1.57 billion in sales for the 12 months to June 30, 2014. 

Sales at the office products and stationary retailer were up 4.7% on the previous year while earnings before interest and tax was $103 million, a 10% increase.

Officeworks reported that it opened six new stores, bringing its network to 151 Officeworks stores across Australia.

The retailer’s online store now represents 12% of overall sales and store transactions.

Officeworks managing director Mark Ward attributed the strong results to the retailer’s “every channel” strategy, which aims to offer a seamless experience through an enhanced web platform, extended product ranges and new services.

“Our focus on merchandise innovation is paying dividends, as is our commitment to lowest prices, widest range and great service,” Ward said in a statement.

“We look forward to continuing to execute on our well-established strategy and investing in the business to achieve further growth.”

Retail expert and partner at accounting firm Lowe Lippmann, David Gordon, told SmartCompany Officework’s results are impressive.

“Officeworks is keeping its costs in hand and reducing its costs as a percent of revenue,” he says.

“It shows that the big box retail strategy is still very relevant.”

Gordon says there is a marked difference between Officeworks’ results and those of big box hardware retailer Bunnings.

“I think the difference between this set of results and Bunnings set of results is Officeworks’ retail strategy has not been challenged, whereas Bunnings has by Masters,” he says. 

But Gordon says while Officeworks reports opening six new stores it also closed four stores at the same time.

“Officeworks is talking about cost reductions not sales growth or margin growth or enhancement of the category mix,” he says.

“The information provided does ask the question as to whether the business has a longer term growth strategy. They are not opening very many stores.” 

Gordon says the key will be whether Officeworks can increase its share of the business-to-business market.  

“We know they own the retail market. Their strategy going forward is all about consolidating that position of strength by focusing on the bottom line through cost reductions.”