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Woolies shares dip as investors take stock

WoolworthsWoolworths shares have lost some of the previous day’s gains as investors take stock of the retailer’s plans to axe jobs and close stores.

Shares in the supermarket giant fell about three per cent on Tuesday, a day after surging more than eight per cent on news of a $959 million restructure that includes slashing 500 jobs and closing 30 underperforming stores.

CMC Markets chief market analyst Ric Spooner said investors have pulled back on expectations the retailer’s turnaround will take some time.

“We have seen a number of cautious broker assessments out today,” Spooner said.

“There has been some profit taking. Woolworths still faces significant troubles and is in a difficult competitive sector.”

Woolworths’ share price closed down 3.3 per cent, or 80 cents, to $23.50.

Investment bank Moody’s said the plan to close loss-making stores was a positive but in the near-term the retailer’s earnings outlook was weak.

In a separate report, Moody’s said rival discount supermarket chain Aldi’s market share will continue to grow due to rapid store expansion and more investment in advertising.

“Aldi’s growth has accelerated in the past few years and this is set to continue,” it said.

It said Aldi, which has around 400 stores compared to Woolworths’ and Coles’ combined total of more than 1800 stores, is expected to increase its store count by 16 per cent over the next two years.

Coles and Woolworths, by comparison, are expected to increase store numbers at a growth rate below three per cent.

Independent grocers, including IGA, are expected to lose the most from Aldi’s expansion into SA and WA.

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