Woolworths Q1 shows improvement

Date : 28 October 2016

Woolworths has released its Q1 2017 results, with sales growing 1.0% to AU$15,333m and an improving picture in its Australian food operations.

Australian food sales up 1.7% to AU$9,321m

Woolworths food operations have recorded a resurgence in performance, with LFL sales growing 0.7% in the quarter. This is a considerable improvement when you consider that Woolworths' food division didn't record a single quarter of LFL sales growth in the whole of FY16. Both transactions and volume growth were responsible for the improved performance, as the retailer invested in lower prices, with 2,230 SKU's now in its 'Price Dropped' and 'Always' campaigns. Woolworths opened two new stores and closed four in the quarter, three supermarkets and one Thomas Dux store. It also refreshed six stores, with more renewals expected in Q2.

Petrol sales down 11% to AU$1,184m

Petrol sales continued to be impacted by lower prices and declining volumes, mainly due to aggressive competitor openings. On a more positive note, merchandise sales grew 5.4% and 2.3% on a total and LFL basis, respectively. Woolworths opened one new site and closed one site in the quarter. No update was given as to the potential sale of the petrol business.

Endeavour Drinks Group  sales up 3.8% to AU$1,972m

Liquor continued to drive strong growth, with LFL sales up 1.8%. Both BWS and Dan Murphy's drove positive LFL growth, with strong promotional campaigns and favourable weather helping to boost trade. Woolworths noted that the market is becoming increasingly competitive, with the requirement for strong promotional and price activity to maintain growth. Three net new Dan Murphy's and four net new BWS stores opened during the quarter, with nine stores refurbished across the estate.

New Zealand Food sales up 1.9% to NZ$1,588m

New Zealand Food maintain steady top line progress during the quarter, however LFL sales declined 0.7%. The decline was attributed to price deflation of 0.5% and the cycling of a strong promotional period the year before. Countdown opened one new store and closed two, with franchise store numbers remaining unchanged at 64.