Australian 'big two' post Q1 results

Date : 30 October 2019

Woolworths and Coles have both posted their respective Q1 results, with:

  • Woolworths' sales up 7.1% to AU$15,903m for the 14 weeks ending 6 October 2019
  • Coles' sales up 1.8% to AU$8,695m for the 13 weeks ending 29 September 2019

Woolworths: strong momentum building

Australian Food sales up 7.8% to AU$10,663m, with LFL sales up 6.6%. Sales were driven by transaction and items per basket growth, with online sales up an impressive 43.2% and achieving a penetration of 4.5% of total Australian Food sales. Unlike Coles, Woolworths cycled a weak Q1 last year, however on a two year average, LFL sales were still up 4.2%. Continued store improvements included the opening of one supermarket and one Metro store, seven store renewals and the continued roll out of Fresh Made Easy; involving new store planograms, improved point of sale and updated equipment to improve 'fresh convenience and fresh service'. Woolies X relaunched its delivery subscription model in the quarter, plus improved its app experience and stability, helping increase mobile engagement. It also continues to focus on ultra-convenience with 49 stores offering Delivery Now, 56 Same Day delivery, 123 Drive up or Drive thru, plus Pick up at 20 Metro stores and Scan&Go at four.

New Zealand Food sales up 4.6% to NZ$1,756m, with LFL sales up 4.8%. Sales growth was driven by fresh, health and private label sales, as well as improved availability. Its new marketing campaigns Disney Words and Great Price have also been well recieved, while online sales grew 38.4%, with penetration hitting a new high of 8.5% of sales driven by enhancements to Same Day delivery. 

Endeavour Drinks sales up 4.9% to AU$2,186m, with LFL sales up 3.2%. BWS and Dan's both reported improved LFL sales, led by growth in beer and spirits. Online sales grew 20.7%, with penetration now at 6.5% of sales. New apps for Dan's and BWS are seeing positive feedback and delivering better personalisation. Like Coles, it also launched a partnership with UberEats in Victoria, which is delivering from around 200 stores. Dan Murphy's loyalty programme (My Dan's) was relaunched in Q1 with membership growing by 600k people to 3.7m, while its store network was unchanged. In contrast, BWS opened six net new stores. 

Coles: slowing growth vs. strong period last year

Coles supermarket sales grew 1.6% to AU$7,705m, with LFL sales up just 0.1%, due to a cycling of a strong trading period in the previous year. Despite this, management appear content with the impact that its Good Things, Great Value campaign, new products and additional investment in flybuys are having in terms of driving LFL sales. Online sales grew 23.5%, with click & collect still the fastest growing part of the operation and now available in all states. Private label sales grew 4.7%, with penetration now at 30%, driven through new product launches and marketing activity. Coles continued to role out its new A,B, C format strategy, with a new Format A store opening at The Glen and four new Format C stores all in Victoria. The retailer is on track to roll out its new range of convenience food to 100 stores by the end of the 2019 calendar year and during the quarter refurbished 10 stores, and opened 3 new new supermarkets.

Coles liquor sales grew 3.5% to AU$726m, with LFL sales up 0.7%. Strong performance from its large format First Choice stores, supported by its First Choice Liqour Market renewal programme, were offset by softer performance of its smaller format Liquorland stores. Success is being seen through exclusive ranges, with penetration of these products growing to 19.1% and 26 new exclusive liquor brands launched in the quarter. Online continued to grow with further website enhancements planned throughout FY20, plus an extension of the UberEats trial into liquor during the period. Store investment continued, with the first Vintage Cellars trial concept to launch in H1 of FY20 and 4 net new store openings.

Coles Express sales grew 3.1% to AU$264m, with LFL sales up 0.4%. The Little Shop 2 campaign and food-to-go drove sales growth, with this being offset by declining tobacco sales. Express opened one net new store in Q1.