Countdown’s quarter driven by fruit and vegetables

Woolworths Group grew total sales 4.2 per cent over the March quarter, with each segment of its business seeing improved trading over the 13 weeks to March 13, 2019.

Shares in the retail conglomerate grew almost 2 per cent on Thursday morning to $34.45 per share (A$32.54).

Comparable sales in Countdown grew 3.8 per cent compared to the same period of 2018, driven by strong sales in fruits, vegetables, and perishables, while total sales were impacted by store closures from previous periods – only improving 2.9 per cent.

Average prices declined by 0.6 per cent, though the drop in the price of fruit and vegetables was partially offset by an increase in the cost of meat.

Countdown’s online operations continued to see strong growth, with online sales increasing 42.8 per cent, now making up 6.6 per cent of total sales, driven by strong interest in click-and-collect.

While Woolworths’ supermarket sales in Australia grew 4.1 per cent, customer scores were slightly impacted by fruit and vegetable prices, quality and availability – which were affected by drought and flood.

“We are pleased with the improvement in sales momentum across the group… after a challenging first half,” Woolworths Group chief executive Brad Banducci said.

“While we had positive transaction and item growth, sales also benefited from lower deflation than recent periods and settled weather.”

Average prices remained relatively flat compared to the same period last year, though, excluding fruit, vegetables and tobacco, prices declined 1.7 per cent.

Over the course of the quarter, Woolworths Group opened four new supermarket locations in Australia, one of which was a Metro offering, while two stores were shuttered.

Online sales increased 34.7 per cent year on year in Q3 to $389.55 million (A$368 million), accounting for 3.7 per cent of total sales, with the strongest growth continuing to be seen in customers using click-and-collect options.

Same-day-delivery was expanded to 56 stores in Australia, and Woolworths Rewards members increased to 11.5 million members.

Comparable sales in the group’s liquor category, Endeavour Drinks, improved 5.9 per cent compared to the previous year, with in-store and online VOC metrics improving across both BWS and Dan Murphy’s over the quarter.

However, according to the business, category mix continues to be an issue – especially in Dan Murphy’s. While beer sales improved 2 per cent, and sales of spirits grew 4 per cent, wine sales fell marginally over the period.

“After slower sales growth in H19, Endeavour Drinks’ sales momentum improved in Q3,” Banducci said.

“We still expect Endeavour Drinks’ EBIT for FY19 to be below the prior year as we invest in improving our range, service and convenience for our customers.

“We are progressing our key strategic priorities with our focus now moving to plans for FY20 to deliver for our customers, team members and shareholders,” Banducci said.

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