Woolworths delivers strong third quarter growth

Jon Condon, 02/05/2014

wooliesWoolworths has announced strong third quarter sales results for its supermarket division, closely mirroring the performance in figures issued by Coles’ parent company Wesfarmers earlier this week.

Woolies Australian Food and Liquor sales division sales for the third quarter reached $10.4 billion, an increase of 4.4 percent on the previous year or 5.1pc when adjusted for the timing of Easter this year.

Comparable store sales for the third quarter increased 2.9pc (3.5pc when Easter-adjusted), continuing the recent trend of improving quarterly comparable sales growth into the third quarter. Woolworths’ first quarter produced sales growth of 2.5pc, and its second, 3.4pc.

During the latest quarter, Woolworths increased supermarket customer numbers, basket size and items sold as well as market share, which showed growth each month when compared to the prior year. The nation’s largest retailer served on average 21.5 million customers per week, an increase of 3.9pc on the previous year.

Managing director of supermarkets, Tjeerd Jegen, said the company’s ‘More Savings Every Day’ program continued to benefit customers through lower average prices, as evidenced by price deflation of 2.9pc when the effects of promotions and volumes are included. Excluding tobacco and produce, the standard shelf price movement index for the quarter increased 1pc.

“We continue to provide the most compelling offer to our customers through an ongoing focus on delivering unbeatable value. In line with our strategy, our fresh foods (including beef) sales and market share grew faster than grocery, demonstrating the relevance of our fresh food offer,” he said.

Woolworths’ online sales increased by more than 50pc compared with the same quarter last year.

“We remain focused on our online offer to provide customers with more flexibility in the way they shop. Increasing loyalty from repeat shoppers and pleasing new customer numbers, assisted by the use of customer insights and targeted offers, have led to another quarter of strong online sales growth,” Mr Jegen said.

Click & Collect (online) sales across the Woolworths divisions increased by more than 100pc as the company built stronger platforms to give customers additional choice in how they choose to shop.

Given the sheer volume of new supermarkets Woolworths has added over the past year, it was no surprise that its headline numbers for sales growth were impressive, analysts said. On an Easter-adjusted comparable stores basis, however, the growth rate was still solid and matched earlier results from Coles.

With nearly 40 more supermarkets operating in the group’s third quarter relative to the same period of last financial year, the 5.1pc increase in Easter-adjusted sales for the food and liquor division translated into a 3.5pc increase in comparable stores sales – a rate identical to the one Coles’ reported on Tuesday.

The trend of quarterly uplifts in Woolworths’ food and liquor growth rates across the bigger base created by the massive expansion of the store network (29 stores were added in the third quarter alone) suggests that there is momentum in the group’s performance, analysts said.

In addition, there is further upside in its online strategies and its increased focus on leveraging its customer insights and loyalty program.

During the quarter, Woolworths’ Australian Liquor and Hotels Group acquired two additional hotels, bringing the total number of venues to 329. About two-thirds offer the company’s own Graziers branded beef through hotel steakhouse venues.


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