Sales grew for Woolworths but the trading environment remains hostile

Sales grew for Woolworths but the trading environment remains hostile

Australian retailer Woolworths Ltd has reported slower sales growth than rival Coles in the first quarter of its financial year.

Woolworths said comparable-store sales from its food and liquor division rose 1.9% in the 14 weeks to 2 October.

Last week, Coles said comparable-store sales from its food and liquor business increased 5.2% in the 13 weeks to 25 September.

Sales from Woolworths' Australian food and liquor division rose 4.4% to A$9.7bn but this again lagged the growth at Coles, which last week said sales were up 5.5%.

Woolworths' total supermarket sales, which includes its stores in from New Zealand and revenues from fuel, increased 5.8% to A$12.56bn.

The retailer's total first-quarter sales stood at A$14.6bn, up 4.9%. Sales excluding fuel were up 3.5% at A$12.86bn.

CEO Grant O'Brien said: "It was a solid start to the year considering retail conditions remain challenging. The retail sector continues to be impacted by a lack of consumer confidence which means we have to work harder for every dollar."

Tjeerd Jegen, director of Australian supermarkets and petrol, said high produce inflation due to the natural disasters early in the calendar year, tightened consumer spending and promotional activity affected the quarter.

"Clearly this is a tough trading environment with continuing deflation across key product categories. Fresh food was a stand-out performer, with strong sales, particularly for new season launches such as lamb and mangoes", he said.

The company confirmed that it expects its full year net profit to grow between 2% and 6%.

Woolworths opened eight new supermarkets in the quarter, bringing their total to 848.