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Countdown owner lifts food sales in Q3

Woolworths Group has posted a 10.7 per cent sales increase in Q3, driven by strong increases in food sales in Australia and New Zealand.

New Zealand’s Countdown supermarkets saw food sales increase 13.7 per cent to NZ$1.9 billion in the 13 weeks to April 5, 2020, and Australia’s Woolworths supermarkets saw food sales increase 11.3 per cent to A$11.2 billion.

In New Zealand, food sales increased over 50 per cent in the week prior to full lockdown, with certain days more than doubling, reflecting the peak period of pantry-loading.

Growth rates have moderated since then, but are still higher than in Australia, where more shops have been allowed to trade through the pandemic.

Under Alert Level 4, which ended on April 26, major supermarkets, pharmacies and convenience stores were the only retailers allowed to remain open.

Countdown’s comparable sales increased 13.4 per cent in the period. While the number of transactions declined 3.5 per cent in Q3, bigger basket sizes led to an overall increase. Sales growth was predominantly driven by grocery, particularly packaged goods, similar to Australia.

Countdown’s online sales increased by 36.2 per cent in the quarter, with 7.9 per cent of all sales occurring online, despite some capacity constraints towards the end of the quarter.

Online penetration was 11 per cent in the last week of the quarter and has continued to increase since then. The quarter also saw the opening of Countdown’s first dedicated e-store in Auckland in mid-April.

Woolworths Group CEO Brad Banducci called Q3 “one of the most challenging periods in the history of Woolworths”, with anxiety around the coronavirus pandemic leading consumers to stockpile essential products, such as toilet paper and canned goods and lockdown laws putting an enormous strain on online operations.

The implementation of new measures, such as installing protective screens at checkouts, temporarily converting some stores in New Zealand to online hubs and other investment into e-commerce and temporarily hiring 22,000 additional team members, drove up costs in Q3, and are expected to continue into Q4.

And while sales growth has continued in April, food sales have moderated compared to March, and drinks sales growth has returned to pre-COVID-19 levels.

“The rate of sales growth for the remainder of the financial year is very difficult to predict at this stage,” Woolworths said.

During the quarter, one store was closed, with 181 stores at the end of the period. In March and early April, four stores were temporarily closed to customers and converted online hubs, and another two stores have been temporarily closed given their CBD locations.

They will reopen to customers at the appropriate time, Countdown said.

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