Woolworths has reported a “patchy” first quarter sales result, with its supermarkets, liquor and new homeware divisions performing well, while sales declined at Big W.
Australia’s biggest supermarket chain increased first quarter sales by 4.9 per cent amid plans to open another 17 food and liquor stores before Christmas.
Chief executive Grant O’Brien said the overall result was “patchy,” following a firm start to the year, particularly in the supermarket division.
“The supermarket business is travelling along with our food and liquor division at 4.4 per cent and in this environment I think that’s a solid result,” Mr O’Brien told analysts on Thursday.
The results come amid challenging retail conditions throughout the nation.
Total sales increased to $14.6 billion for the 14 weeks to October 2, compared with $13.9 billion a year earlier.
But sales at Big W declined 2.7 per cent to $1.04 billion as discretionary spending declined, which pulled the general merchandise division’s sales down by 1.6 per cent.
The declines in general merchandise were worse than market watchers had expected but analysts said a firm result from Dick Smith brought the overall sales figures in line with expectations.
Shares in Woolworths declined seven cents to close at $24.08, on a day the broader market gained 2.4 per cent.
Woolworths’ supermarket division increased sales by 5.8 per cent to $12.6 billion as the company increased market share, customer numbers, basket size and items sold.
Mr O’Brien said the liquor business continued to gain market share but added that he wanted to accelerate sales of packaged goods in Woolworths supermarkets.
“My reference to accelerating is simply an ambition to provide a higher number,” he told analysts.
“It’s got nothing to do with the guidance we’ve provided this year.
Mr O’Brien said the company maintained its earlier guidance, describing the supermarket business as “solid”.
He said Woolworths had not brought forward plans to open another 17 food and liquor supermarkets prior to Christmas and promised to elaborate on property plans during a six-hour investor briefing next Wednesday.
“It’s very hard to pull a pipeline of properties forward. It’s not something that’s been done here.”
Woolworths said it served an average of 19 million customers per week over the quarter and recorded growth in its private label range.
Trading continued to be affected by tightened consumer spending with higher domestic savings rates, interest rates, petrol and utility prices.
But the supermarket giant opened eight supermarkets throughout the year and closed seven Dick Smith stores. Dick Smith’s online division grew by 40 per cent.
Mr O’Brien said he was also pleased with the performance of the four new Masters Home improvement stores in Melbourne and southeastern Queensland.
Price falls, however, would be an issue due to food deflation, driven by the fresh produce.
Investors will now focus on Woolworths’ strategy day to be held next Wednesday.
