Australia’s biggest supermarket chain, Woolworths, outdid Coles in the March quarter, yesterday reporting a 4.2% rise in third-quarter sales, or 5.1% adjusting for the later timing of Easter in late April instead of at the end of March and early April in 2018.
The retailer said its sales growth benefited from lower food deflation and better weather – thanks to the impact of higher vegetable prices caused by the heavy rains in North Queensland in February and March.
Total sales from continuing operations rose to $14.9 billion in the 13 weeks to March 31 from $14.3 billion a year earlier.
Australian food sales rose 3.6% on a comparable store basis, which excludes new store openings (4.1% on a headline basis).
Thursday’s statement revealed that the Endeavour drinks business will report weaker earnings in 2018-19 than the year before (Big W is also expected to be a weak spot for Woolies with another loss).
In its December half-year earnings report in February, the company said weather hurt sales in all of its businesses.
But on Thursday the retailer said it saw an improvement in weather across key trading states with the timing of New Year’s Eve supported sales in the third quarter.
The company’s same-store grocery sales growth of 4.2 percent, adjusted for holidays, beat rival Coles, which revealed 2.2 % growth in adjusted comparable sales on Monday
In a bid to further boost profitability, the grocer last month said it would shut about a sixth of its loss-making discount department stores chain, the Big W, over the next three years.
Headline sales for Big W jumped 2.6% (5.6% adjusted for Easter) on a headline basis and 4.4% and 7.4% on an Easter-adjusted basis.
Sales in the retailer’s NZ food business also boomed – up 4.4% on a comparable basis for no adjustment for Easter and more than &% after adjusting to the later Easter in April.
In yesterday’s statement Woolworths CEO, Brad Banducci said: “We are pleased with the improvement in sales momentum across the Group in Q3 with Australian Food comparable sales growth of 4.2% (Easter-adjusted) a particular highlight, after a challenging first half. While we had positive transaction and item growth, sales also benefitted from lower deflation than recent periods and settled weather.”
“After slower sales growth in H19, Endeavour Drinks’ sales momentum improved in Q3 with Easter-adjusted comparable growth of 5.9%. At H19 we noted that the unsettled weather had negatively impacted sales across all of our businesses which was most pronounced in Endeavour Drinks.
“More settled weather across key trading states and the timing of New Year’s Eve supported sales in Q3. We still expect Endeavour Drinks’ EBIT for F19 to be below the prior year as we invest in improving our range, service and convenience for our customers.
“As foreshadowed on 1 April, BIG W sales growth has been strong with Easter-adjusted comparable sales growth of 7.4%. The challenge for BIG W remains converting strong sales growth into improved profit and we continue to expect a loss before interest and tax of $80-$100 million in F19. New Zealand Food delivered solid Easter-adjusted comparable growth of 3.8% and Hotels also improved on Q2’19 growing by 2.7%.
“Our F19 results announcement is currently scheduled for 29 August 2019 and F19 will be a 53-week year,” he noted.
Woolies shares ended the day up 0.78% at $32.23.
