Australia’s largest supermarket chain Woolworths Ltd saw sales increase 4.2% in its first quarter, excluding petrol, in what it described “solid start to the financial year” despite “underlying challenges for the retail sector”.

Turnover for the quarter reached A$13.9bn (US$13.6bn). Sales in its Australian Food and Liquor division rising 3.2% A$9.3bn. Comparable store sales in the division grew 2%, while inflation remained flat.

Woolworths said that its “strategy of reducing shelf prices, continuing to evolve new formats and customer engagement have enabled us to maintain market share and grow customer numbers, items sold and basket size”.

The retailer’s New Zealand supermarket division saw sales increase 4.7% in New Zealand dollar terms to NZ$1.4bn (US$757m). Comparable sales were up 4.5% due to the “success of the improved customer offer” with the roll out of new format stores, “improved in-stocks, range and private-label offer”, Woolworths said.

Woolworths CEO Michael Luscombe added: “This sales result is a solid start to the financial year which continues to hold underlying challenges for the retail sector such as tighter consumer spending and the deflationary impacts of the Australian dollar.”