New Zealand food sales increased to $1.63 billion in the 14 weeks to October, from $1.58 billion in the same quarter a year earlier, Woolworths said in an update to the Australian stock exchange.
In Australian dollars, sales gained 0.4 per cent to A$1.5 billion, with the smaller gain down to a weaker kiwi dollar against its Australian counterpart.
Comparable sales rose 2.7 per cent in the first quarter as “customers responded positively to our investment in service despite a number of competitor promotions during the period”, Woolworths said.
Countdown’s food price index rose 1.6 per cent in the quarter, “driven by a combination of continued New Zealand dairy price inflation and higher levels of inflation in fresh produce impacted by growing conditions and supply”, it said.
Government figures show grocery food prices rose 1.4 per cent in the three months ended September 30, outpacing a 0.7 per cent increase in the broader food prices index.
Woolworths said 52 of its stores now have product ranges tailored for customer demographics.
There are now 184 Countdown stores in New Zealand, with the company opening one and closing one in the quarter, while the number of franchise stores rose by one to 66.
The parent company has continued building momentum in the first quarter of fiscal 18, booking strong growth well ahead of Wesfarmers’ owned chain Coles.
Woolworths Australian Food sales increased by 4.7 per cent to $9.63 billion during the 14 weeks ended 1 October, while comparable store growth was 4.9 per cent.
This compares well to Coles’ 1.5 per cent increase in food and liquor sales reported to the market last week, but slightly lower than Citi’s forecast of 5.1 per cent comparable growth.
Total sales from continuing operations were up 3.7 per cent to $14.52 billion on growth in all divisions.
Troubled discount department store Big W managed to find sales growth on the back of price investment, increasing top line sales by 2.5 per cent to $890 million, while comparable store growth was 2.9 per cent.
Endeavour Drinks sales increased by 3.8 per cent to $2.04 billion, while comparable store growth was 3.3 per cent, underpinned by a strong performance at BWS.
Woolworths Group chief Brad Banducci provided no specific guidance, but said the team is “energised and excited” moving into the Christmas trading period.
“We are also conscious of the changing needs of our customers who are looking for increasing levels of convenience and we are working hard to meet this need, with Pick Up [click and collect service] one of the many initiatives we have underway,” he said.
“While we are pleased with the progress during the quarter, there remains much more to do with our focus now firmly on the important Christmas trading period.”
Woolworths said average prices declined by 2.4 per cent during the first quarter on material reductions in fruit and vegetable prices compared to the prior corresponding period (pcp), which was also called out by Coles boss John Durkan last week.
Prices declined 1.2 per cent excluding those categories, with around 290 products added to its ‘price dropped’ and ‘always’ (EDLP) program since the end of FY17, bringing the total to 3,800.
Australian Food recorded comparable transaction growth of 4.6 per cent in the quarter, comparable items per basket growth of 1.4 per cent and comparable item growth of 6 per cent.
Supermarket customer feedback scores indicate an overall satisfaction rate of 79 per cent, while store specific metrics indicate an 83 per cent score, up four per cent on last year.
Woolworths now has 1,003 supermarkets, with eight supermarkets opened during the quarter, including three metro conversions, as well as 7 renewals and 11 upgrades to existing locations.
Big W finds sales growth
Big W has booked comparable sales growth for the first time in several periods, with comparable growth adjusted for the timing of annual toy sales coming in at 2.1 per cent.
The result compares favourably to Wesfarmers’ owned Target, which took a 6.4 per cent decrease in sales to the market last week.
Woolworths said its turnaround was beginning to sink in with customers, but advised the market that the strategy is a “multi-year journey” and that traffic counters have now been installed in 184 stores.
Toys, small appliances, towels and manchester were called out as strong performing categories, with Woolies reporting strong increases in customer feedback.
Big W found growth in several key metrics after experiencing declines in the pcp, including transaction growth (up 1.7 per cent), comparable items per basket (up 5.1 per cent) and comparable item growth (up 6.8 per cent).
Endeavour Drinks launched a one-hour pickup service at BWS during the quarter, while Dan Murphy’s online continues to deliver double-digit growth.
Petrol sales increased by 4.6 per cent during the quarter to $1.2 billion, driven by a 7 per cent increase in average fuel sell prices.
Comparable sales across its 532 sites increased by 3 per cent, while comparable volumes were down 2.7 per cent.