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Woolies’ holiday season starts strong with first-quarter sales up 12 per cent

Woolworths Group rode its strong FY20 trading into the beginning of FY21, delivering first quarter sales results 12.3 per cent up at $17.9 billion, and online sales growth of 86.7 per cent at $1.5 billion.

And with Christmas only 50 days away the group is anticipating a “very different” holiday season, but aims to deliver the opportunity for customers to enjoy the spirit of the holiday in a Covidsafe way.

“It has been a pleasing start to FY21, with all retail businesses delivering strong sales growth and customer metrics remaining solid,” said Woolworths Group chief executive Brad Banducci.

“Covid costs remain material as we continue to prioritise the safety of our customers and team but have moderated as we become more efficient at operating Covidsafe.”

The cost of running Covidsafe businesses has decreased over time for Woolies, now only making up 1 per cent on sales, compared to 2 per cent in Q420.

And, while back payments to underpaid staff members are still ongoing, Woolies expects to have finished the majority of payments by the end of the first half. The remainder, which will be made to Dan Murphy’s and BWS team members, will be finalised in the new calendar year.

Australian supermarkets

In Australia, the business’ supermarkets saw sales in-store grow 9.2 per cent on the same time last year to $10.6 billion, while online sales doubled to $961 million.

However, the group’s Metro stores saw a decline of 5.1 per cent to $235 million as CBD foot traffic continues to be lighter than average.

“Freestanding and neighborhood stores continue to outperform with sales growth in major shopping malls and city locations still impacted by customer preferences to shop locally,” the business said.

“Sales continued to benefit from Covid-driven higher in-home consumption as well as the success of Disney+ Ooshies. Sales growth in Victoria was approximately 20 per cent in the quarter due to the more stringent restrictions in place.”

New Zealand supermarkets

Woolies’ New Zealand counterpart Countdown saw sales grow 6.9 per cent during the quarter to NZ$1.8 billion, while online sales rose 50.5 per cent to NZ$224 million.

Sales growth was primarily driven by items-per-basket growth, and the quarter saw a third dedicated e-commerce fulfilment center in Wellington and introduced in-app online shopping – helping push online grocery sales.

A “short-lived sales increase” occurred in August when a number of new Covid-19 cases were reported in New Zealand, likely as panicked Kiwis stocked up for a potential second wave, but growth quickly returned to normal.

As New Zealand was in lockdown for a portion of the quarter, no new stores were opened.

Big W

Discount department store Big W saw substantial growth during the quarter, driven by bigger basket sizes of leisure and toy purchases, with sales up 20.4 per cent to $1.1 billion.

Online sales were up 175 per cent to $104 million, due to the fact stores in Melbourne were transitioned to fulfil home deliveries and pick up services, as well as the launch of Big WX – a team within Big W that will focus on online, and collaborate with Woolies X, Countdown X and Endeavor X.

Endeavour Drinks

Woolies’ liquor arm Endeavour Drinks also saw strong growth of 21.4 per cent to $2.6 billion, and online growth of 57.6 per cent to $227 million.

Spirits was the fastest growing category in Dan Murphy’s and BWS, particularly gin, while wine and beer sales remained strong.

Hotels

However, the group’s Hotels division didn’t fair as well as the rest of the group, suffering a fall in sales of 33.2 per cent to $313 million, largely due to Covid-19 restrictions putting a stop to the majority of travel plans.

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