Woolworths food, liquor and BIG W sales rise faster than expected

Sue Mitchell
May 2, 2019
AFR

Woolworths’ same-store sales in Australian supermarkets rose 4.2 per cent in the March quarter, the fastest growth in more than a year, as shoppers put more items in their shopping baskets.

The 4.2 per cent same-store sales growth, adjusted for the late Easter, exceeded market forecasts between 2.8 per cent and 3.3 per cent.

It followed 2.7 per cent growth in the December quarter and 4.1 per cent growth in the March quarter last year. It was the fastest growth since the December quarter 2018, when same-store sales rose 5 per cent.

In comparison, Coles’ same-store supermarket sales rose 2.4 per cent in the March quarter, buoyed by higher prices for fresh foods and stronger demand for fruit and vegetables inspired by Fresh Stikeez.

Woolworths has been outperforming Coles since the second quarter of 2017, except for September quarter 2019, when Coles’ highly successful Little Shop promotion and free plastic bags helped boost same-store sales by 5.1 per cent, the strongest growth in almost three years, while Woolworths sales rose only 1.8 per cent.

Woolworths bounced back strongly in the 13 weeks ended March 31, with transactions rising 1.9 per cent, items per basket up 2.6 per cent and comparable items growth 4.5 per cent.

While Coles’ food prices rose 0.9 per cent in the quarter, boosted by higher prices for fresh fruit and vegetables, meat and bread, Woolworths’ prices were flat.

Woolworths Endeavour Drinks business, which owns Dan Murphy’s and BWS, also delivered its best sales growth for more than a year.

Same-store sales, adjusted for Easter, rose 5.9 per cent, compared with 0.2 per cent in the December quarter and 3.3 per cent in the March quarter last year.

However, chief executive Brad Banducci said the retailer still expected Endeavour Drinks’ earnings to fall this year due to investments in range, service and convenience.

The turnaround at BIG W is also gathering pace, with same-store sales jumping 7.4 per cent after growing 5 per cent in the December quarter and falling 1.2 per cent in the March quarter last year.

“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 million to $100 million in 2019,” Mr Banducci said.