Woolworths sees sales grow in "price leadership"

Woolworths sees sales grow in "price leadership"

Woolworths Ltd said it shrugged off "consumer uncertainty" and deflation to post "solid" first-quarter sales.

Australia's largest retailer said sales from continuing operations rose 6.1% to A$15.68bn (US$14.84bn) during the three months to 6 October. Total sales were slightly lower thanks to the impact of discontinued business, rising by 3%.

The result was boosted by Woolworths' Australian food and liquor business, where a focus on "price leadership" allowed it to grow customer numbers. The supermarket group said it was able to attract, on average, an additional 1.1m customers a week during the period. The supermarket business grew sales by 6.4% in the period in spite of food deflation which stood at 4.3%. Comparable-store sales for the quarter increased 2.5%

"This was a pleasing start to the year, underpinned by growth in our Australian food and liquor business. Our ongoing commitment to price leadership continues to drive unit and customer growth as we reinforce Woolworths' position as Australia's lowest priced full range supermarket," CEO Grant O'Brien said.

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First Quarter Sales Results - Financial Year 2014 14 weeks to 6 October 2013

31 October 2013

  • Sales from Continuing Operations increased 6.1%, underpinned by Australian Food and Liquor which delivered solid unit and customer growth driven by price leadership
  • An additional 1.1 million customers on average per week have chosen to shop in our stores during the quarter
  • Solid result despite weak trading conditions impacted by price deflation and consumer uncertainty
  • Completed the acquisition of EziBuy, the leading direct retailer of apparel and homewares in Australia and New Zealand 

Woolworths Limited today announced first quarter sales from continuing operations of $15.7 billion, an increase of 6.1% on the previous year.

CEO Grant O’Brien said: “This was a pleasing start to the year, underpinned by growth in our Australian Food and Liquor business. Our ongoing commitment to price leadership continues to drive unit and customer growth as we reinforce Woolworths’ position as Australia’s lowest priced full range supermarket. Our customers continue to benefit from lower average prices as reflected by deflation of 4.3% for the quarter (when the effects of promotions and volumes are included) driven by campaigns such as ‘More Savings Every Day’ and Fresh deflation.

“As anticipated, retail trading conditions remained subdued with ongoing consumer caution reflecting cost of living pressures, higher unemployment and uncertainty prior to the Federal Election. We continue to support the local communities in which we operate and created 1,000 new jobs during the quarter.

“Australian Food and Liquor delivered sales growth of 4.5% with increased market share, customer numbers, basket size and items sold. Our increased capability in using our data to deliver insights and tailor the shopping experience for customers also continues to enhance growth.

“New Zealand Supermarkets sales increased 1.8% , driven by stronger customer numbers and items sold which resulted in increased market share. This is a good result in light of ongoing subdued economic conditions and price deflation across a number of key categories.

“Petrol sales for the quarter increased 12.6% with volumes increasing by 3.5%. Forecourt work to improve the customer experience, our ongoing focus on targeted fuel promotions and an improved merchandise offer is driving strong growth in customer numbers.

“BIG W sales for the quarter decreased 3.6% due to the timing difference in the annual Toy Sale relative to the reporting date and ongoing price deflation, particularly in Home Entertainment. As advised at the FY13 year end, we have commenced the strategic repositioning of BIG W to drive profitable growth in categories that are core to our customer, which had an effect on sales growth during the quarter.

“Hotels sales for the quarter increased 6.3%, driven by the acquisition of hotels during the prior year as well as changes to the Victorian gaming regulations which were cycled during the quarter.

“Home Improvement sales increased 28.2% for the quarter with our Masters store roll out remaining on track. With a good start to the Spring season, we remain confident that we are building a sustainable future for Masters to become a long term profit contributor for the Group.

“During the quarter, we completed the acquisition of EziBuy, the leading direct-to-customer retailer of apparel and homewares in Australia and New Zealand. The acquisition will allow us to grow our multi-option presence and provides us with a unique competitive advantage as a result of the expertise the EziBuy team brings to the business.

“Online sales from continuing operations increased 37% for the quarter. We are on track to record online sales of more than $1 billion in FY14.

“We are focussed on the second quarter of the financial year as we enter the all important Christmas period and we continue to make good progress against our four Strategic Priorities.”

 

 

Original source: Woolworths Ltd