Woolworths is heading for a record full year sales and earnings after reporting an 8.8 per cent rise in third-quarter sales following solid growth in its supermarkets and general merchandise businesses.
Sales for the 13 weeks ended April 1 rose to $10.559 billion, from $9.707 billion in the prior corresponding period and the retail giant said it was reaffirming its sales outlook for the full year for growth of between 8 and 12 per cent
The result matched the forecast from brokers ABN Amro and were a little ahead of those from Goldman Sachs JB Were who forecast growth of 7.4 per cent.
Of interest was the performance in same store sales growth which is now running at its highest level for more than a year, a sure sign the retailer has got its biggest and most important business running well.
Woolies says its Australian Food and Liquor sales for the quarter were $6.891 billion, up 8.3 per cent.
“The strong comparable sales have continued into the third quarter reflecting continued acceptance from our customers of our comprehensive offer. Our team has continued to focus on improving our fresh food offering with an emphasis on quality and in-store execution. A further rollback campaign was undertaken in the quarter with positive results.” said Naum Onikul, Director of Supermarkets.
Woolies says it plans to open more than 10 new stores before the end of June, increasing its supermarket network to 770 across Australia.
Sales for its supermarkets division rose 7.8 per cent to $9.178 billion in nthe 13 week third quarter.
On on a comparable or same store basis, sales in Food and Liquor rose 6.6 per cent in the quarter, compared to a 6.4 per cent rise for the second quarter and first quarter sales up 4.9 per cent.
The growth in same store sales compares more than favourably to the 3.7 per cent figure in the third quarter of 2006.
It’s instructive also to realise that as the pressure from higher petrol prices and inflation generally has eased Woolies same store sales growth has accelerated from the first quarter when petrol prices and inflation were running at their peak. Woolies says food price inflation in the third quarter was around 3 per cent compared to 4 per cent in the first quarter.
That same store growth is more than double that at rival Coles and the best indication of the still widening gap between the two businesses.
The improvement from the slow days of the first quarter were also seen in the Big W discount chain: its sales and earnings were static in the first quarter and not much better in the second as the company blamed higher petrol prices for forcing consumers to slow purchases.
Third quarter fuel sales rose 9.2 per cent to $1.2 billion in the third quarter, andsales at Big W discount stores rose 18 per cent to $777 million in the quarter, helped by increased demand before Easter.
That latter figure includes consumer electronics (Dick Smith, Tandy and Powerhouse brands) which lifted sales 13 per cent to $313 million. This included $8 million in sales from its wholesale venture in India with the Tata group to supply its chain of new electrical stores.
Third-quarter New Zealand supermarket sales rose 3 per cent to $1 billion and sales at the hotels business, Australia’s biggest owner of hotels, rose 14 per cent to $252 million.
