Woolworths has posted faster sales growth than Coles, in a sign it is regaining momentum in the supermarket battle.
Third quarter earnings for Australia’s biggest supermarket business rose 4.4 per cent compared to the same period last year to $10.38 billion, outstripping Coles’s 3.9 per cent rise in food and liquor sales.
Woolworths chief executive Grant O’Brien says the business’s momentum was clear in these results.
“This is evidenced through market share growth and demonstrates the success of the work undertaken to deliver our first strategic priority ‘to extend our leadership in food and liquor’, with fresh sales and market share growing faster than grocery,” he noted in the report.
Mr O’Brien says the sales growth was achieved despite a 2.9 per cent reduction in prices when the effect of promotions and volumes were included.
The retail giant’s petrol and service station sales eclipsed its rival by a bigger margin, climbing 5.5 per cent even though the amount of petrol sold fell 1.3 per cent – both retailers were affected by an Australian Competition and Consumer Commission deal to limit petrol discounting.
The company’s Masters and Home Timber and Hardware stores posted a combined 29 per cent increase in sales, but much of the growth is due to the rollout of new stores in the expanding Masters chain.
The Woolworths hotels division posted a modest 1.1 per cent rise in sales, which was even more disappointing given the timing of holidays this year.
More disappointing was Woolworths’s struggling Big W discount department store chain, which saw sales down 3.8 per cent, echoing poor results for Wesfarmers’s Target and Kmart stores.
Mr O’Brien is hoping the appointment of a new managing director for Big W will spark a turnaround in its performance.
“As anticipated, general merchandise sales continue to be impacted by the business transformation of Big W as well as challenging trading conditions, ongoing price deflation and continued promotional activity.”
In total, Woolworths posted a 5.3 per cent rise in sales across its business to $15.2 billion.