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Woolworths’ sales slow in first quarter

Marking a challenging start to fiscal 2019, Woolworths Group lifted total sales across all sectors just 1.9 per cent to $14.85 billion in Q1, compared to 3.7 per cent in the same period last year.

Woolworths Group chief executive Brad Banducci said that while sales were slow, customer and brand metrics remained strong across the group, thanks to positive responses to the removal of single-use plastic bags.

At the same time, however, Woolworths blamed the bag ban for slower supermarket sales while customers acclimated to the change. The bag ban did contribute to a temporary increase in items-per-basket due to customers purchasing reusable bags at checkout, but this trend was on the decline toward the end of the quarter, suggesting customers are beginning to bring their own bags.

The retailer also noted the negative impact of “a competitor continuity program” – i.e. Coles’ Little Shop – on sales.

“In Australian Food, comparable sales momentum improved materially in September compared to August leading to growth of 1.8 per cent for the quarter with market share by the end of the quarter broadly returning to Q4’18 levels,” Banducci said.

Average prices across the supermarket declined by 1 per cent over the quarter, with groceries, fruit and vegetable prices remaining flat following a 10 per cent deflation in Q4 FY18.

Online supermarket sales grew 25.6 per cent to $343 million, largely through the adoption of click-and-collect and increased customer engagement across digital channels, while the group’s WooliesX arm launched a refreshed Woolworths App, as well as an express delivery pilot in Sydney and Melbourne.

The group’s alcohol sector Endeavour Drinks saw a 3 per cent increase in sales in the quarter to $2.1 billion, with both Dan Murphy’s and BWS experiencing positive comparable growth despite the removal of single-use plastic bags in attached BWS stores.

Online alcohol sales through both BWS and Dan Murphy’s grew by double-digits, with Dan Murphy’s online penetration now approximately 7 per cent of sales, split equally between pick-up and delivery.

Big W wins big online

Discount department store Big W saw total sales increase 1.3 per cent to $902 million, with the leisure and kids categories benefiting from strong online growth, while summer apparel sales fell below expectations.

Online sales grew 177 per cent in the quarter due to the adoption of pick-up options, range expansion and improvements to the search function of the Big W website.

The group’s New Zealand supermarket chain Countdown saw strong infant formula sales, leading to a 2.6 per cent increase in total sales to $1.7 billion.

By the end of the quarter, 87 Countdown stores had removed single-use plastic bags, with all remaining stores converted by mid-October, with customers reacting well to the change.

Countdown’s online sales remained strong, growing 40 per cent on last year due to strong growth in customer pick-up.

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