Finance Finance News Woolworths boosted as sales growth picks up

Woolworths boosted as sales growth picks up

Woolworths has enjoyed some growth. Photo: AAP
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Woolworths has seen its supermarket sales growth improve in the second quarter, edging ahead of rival Coles, during a “challenging” half.

The company posted a 1 per cent increase in half-year net profit of $979 million.

Comparable food sales rose 2.7 per cent in the second quarter, driven by an increase in items per basket — an improvement from the 1.8 per cent rise in the previous quarter, which was adversely affected by the removal of single-use plastic bags and strong competition.

It signals a shift in momentum between the two supermarket giants over the half, with Coles flagging on Tuesday that its sales growth had slowed in the second quarter, after a boost from its ‘Little Shop’ collectables campaign put it ahead of Woolworths in the previous three months.

“It was a challenging half across all our businesses with subdued consumer demand and volatile weather in the second quarter,” Woolworths chief executive Brad Banducci said.

The company said liquor chain Dan Murphy’s did not perform as well as expected, flagging lower earnings for its drinks business over the full year.

Sales at department store chain Big W rose, with comparable sales up 3.8 per cent after a stronger second quarter, but the company said it remained “a work in progress”.

Commenting on the outlook, Mr Banducci said he expected “a more subdued consumer environment for the foreseeable future”.

“We expect the [food] market to remain challenging including ongoing input cost pressures such as meat,” he said.

Shareholders will receive an interim dividend of 45 cents per share, up from 43 cents the previous year.

The sale of its petrol business to UK retail conglomerate EG Group for $1.7 billion is expected to be complete by the end of March, subject to approval by the Foreign Investment Review Board.

If it gets the green light, Woolworths said it intended to return capital to shareholders, including a potential off-market buyback.