Woolworths, Coles in sales growth dead heat

Eli Greenblat
April 30, 2014
The Age
In a dead heat between Australia’s two biggest supermarket chains, Woolworths and Coles have tied for third quarter growth, setting up the final quarter of the financial year as the next chance for Woolworths to dislodge arch rival Coles as the fastest growing supermarket business after five years of coming second.
Woolworths has reported this morning third quarter like for like sales growth of 3.5 per cent Easter adjusted for its flagship Australian supermarket operations, matching the 3.5 per cent posted by Coles yesterday for the same period.
In early trade this morning, Woolworths shares are down 2.1 per cent to $37.25.
When Coles yesterday reported slowing growth to 3.5 per cent, adjusted for the timing of Easter, it was expected Woolworths would eclipse that with growth of around 3.8 per cent, giving it crowing rights as the faster growing business for the first time in 18 quarters.
But Woolworths, Australia’s biggest supermarket chain, this morning reported its flagship Australian food and liquor business had posted comparable store sales growth of 2.9 per cent for the March quarter or 3.5 per cent adjusted for the timing of Easter – making it a dead heat with Coles.
Although still respectable growth for Woolworths’ Australian supermarket business, the growth did come in slightly below analyst expectations and also sees them missing out on grabbing the crown from Coles.
For the last five years Woolworths and Coles have been fighting a pitched battle for customers with Coles owner Wesfarmers turning around the business since it acquired it in 2007 to trounce Woolworths in terms of growth and pose a real competitive threat for the first time in years.
Woolworths had been clawing back sales and momentum from Coles for the last year and was expected to finally beat Coles this morning when it released its third quarter sales results. It makes the final quarter of fiscal 2014 the next opportunity for Woolworths to beat Coles in terms of like for like sales growth.
Woolworths showed it is building momentum with March quarter like for like sales of 3.5 per cent coming from 3.4 per cent growth in the second quarter and 2.5 per cent in the first quarter. Total sales for the March quarter at its supermarkets were up 5.1 per cent.
Woolworths, like Coles, has also suffered from restrictions placed on its popular fuel shopper docket scheme by the competition regulator with both supermarket chains using the loyalty discount scheme to drive customers into its supermarkets and convenience petrol stations.
Woolworths this morning reported total sales from group continuing operations were up 5.3 per cent or 5.9 per cent adjusted for Easter to $15.192 billion.
Its Big W division continued to suffer, total sales down 1.1 per cent Easter adjusted or 3.8 per cent in total terms to $900 million. Like for like sales fell a massive 8.5 per cent or 5.9 per cent Easter adjusted.
At its hotels division, traditionally a very strong performer, sales were $357 million, an increase of 1.1 per cent or 0.6 per cent Easter adjusted.
Its burgeoning home improvement chain Masters and wholesale hardware operations had sales for the quarter of $374 million, an increase of 29 per cent. Its Masters chain showed sales of $179 million for the quarter, up 39.8 per cent.
Across the Woolworths group, online sales increased more than 50 per cent.
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