Woolworths has flagged higher costs for labour, fruit and vegetables and a wider loss for its troubled discount department store Big W this half, as it blitzed supermarket rival Coles with the strongest quarterly sales growth in years.
The country’s biggest supermarket chain said Australian food sales at its 1000-odd supermarkets grew 5.1 per cent in the third quarter to $9.28 billion, or 5.6 per cent adjusting for the timing of Easter.
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Like-for-like sales, excluding new stores, grew by 4.5 per cent, compared with a 1.3 per cent decline the prior corresponding period.
The like-for-like growth beat forecasts by investment bank Deutsche Bank, of 3.2 per cent, as well as outperformed the 0.8 per cent Easter-adjusted quarterly growth recently reported by Coles.
Total group sales were up 4.4 per cent to $13.8 billion in the 13 weeks to April 2, or 4.4 per cent adjusting for Easter.
Woolworths chief executive officer Brad Banducci said Woolworths was “still in the very early stages” of its turnaround but growth in Australian Food was a “particular highlight.”
Woolworths said total group sales were up 4.4 per cent to $13.8 billion in the 13 weeks to April 2. Photo: Glenn Hunt
But Mr Banducci flagged rising costs in the second half as Woolworths cuts prices at its supermarkets, as well as deeper woes at Big W.
” … the second half of 2017 will reflect the financial impact of higher investment in key areas, cost price increases (particularly in meat and produce) and our response to ongoing competition and promotional intensity,” he said.
“BIG W is a work in progress and its turnaround will be a multi-year journey. Due to the investment we are undertaking as part of our revised plan, we currently expect BIG W to report a loss before interest and tax of between $115 and 135 million for in the second half of 2017.”