Australia's largest food retailer Woolworths is still flavour of the month with investors as gains from a cost-cutting drive flow through. Woolworth's Project Refresh aims to improve supply chain efficiency and thereby improve margins and profitability.

The company initially aimed for A$185m (US$97m) in savings by 2004 but analysts, including Credit Suisse First Boston, expect savings to surpass this estimate. "Given the magnitude of efficiencies available, we believe margins can surprise on the upside with the scope to ultimately double savings currently estimated in Project Refresh," CSFB said this week.

The broking house rates the stock a "buy" and expects 15% to 20% earnings per share growth, which is huge praise for a sector not renowned for producing high fliers. Macquarie Equities also rates Woolworths as an "outperform" and Deutsche Bank sees increased sales of 9.5 per cent a year through to 2004 and 2005.

With the company having just swallowed a number of new stores following the disintegration of Franklins it is now in an enviable position with a vice-like grip on market share and a fawning investment market - the market is now waiting for chief executive Roger Corbett to use this situation to launch a buying spree, possibly starting with West Australia's Foodland.

By David Robertson, just-food.com correspondent