Economy

Woolies shares jump on strong sales growth

Woolies shares jump on strong sales growth”

Countdown supermarket sales rose 3.2% in the first quarter of the 2018 financial year, boosted by more expensive dairy products and fresh produce.

Woolworths Ltd. (WOW.AU) said total sales in its key Australian food division rose by almost 5% in the fiscal first quarter, even though food prices fell amid tough competition in the supermarket sector.

Total sales from continuing operations came in at A$14.52 billion ($11.16 billion) for the 14 weeks to October 1, up from A$14.01 billion a year ago.

Both results were weighed down by deflation, with Woolworths noting food prices fell across the board by 2.4 per cent over the quarter.

Sales at the struggling Big W chain rose by 2.5%, New Zealand food sales rose by 3.2% in New Zealand dollars and Endeavour Drinks sales rose by 3.8%.

The retail giant said the comparable sales growth was achieved despite sharply lower fruit and vegetables prices, including "major" price reductions for tomatoes, lettuce and berries due to favourable growing conditions. The company said its performance was even better on a same-store sales basis, with sales rising by 4.9%. Government figures show grocery food prices rose 1.4% in the three months ended September 30, outpacing a 0.7% increase in the broader food prices index.

"While it is still early days in our turnaround strategy, the first key element in our plan was to regain price trust with our customers", Woolworths chief executive Brad Banducci said.

Woolworth liquor businesses, Dan Murphy and BWS, reported a solid increase in comparable sales of 3.3 per cent for the quarter, driven by discounting and promotions.



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