Woolworths Group reported a 1.5 per cent increase in supermarket sales in the March quarter, a noticeable distance behind the 4.2 per cent growth reported by Coles earlier in the week.
CEO Brad Banducci said it had been a “challenging quarter” across the company, with “a noticeable shift in customer sentiment and shopping behaviours since Christmas”.
Cost-of-living pressures are starting to impact more affluent areas while maintaining impact on families, younger couples, and singles.
Group sales were up 2.8 per cent to $16.8 billion and eCommerce group sales up 17.6 per cent to $1.9 billion while New Zealand Food and Big W continued to lag.
“The consumer is coming in with a fixed dollar budget, and they are very disciplined in how they are spending that across the store,” Banducci said.
Rising rents, utility bills, and a resignation that mortgage interest rates not declining is seeing consumers reduce their supermarket spend.
“We don’t expect our costs to be deflationary, we expect trading conditions to be challenging for the next 12 months,” he said.
Snapshot
- Australian Food: $12.5bn, up 1.5% on prior corresponding period (pcp);
- Australian B2B: $1.09bn, up 3.2% pcp;
- NZ Food: $1.9bn, up 0.2% pcp; and
- Big W: $1bn, down (4.1)% pcp;
Banducci said one of the reasons the group’s performance fell against Coles was because it hadn’t run a collectibles program, while Coles ran its Pokemon promotion.
His comments echoed those of Coles CEO Leah Weckert regarding the 1H24 results, where she pointed out this year’s positive performance was, in part, due to running the Pokemon campaign, while the year prior, it was Wooworths who nabbed the collectibles corner of the market.
“Our focus for the rest of F24 remains on providing value for our customers reflecting their cost-of-living pressures. We expect trading conditions to be challenging for the next 12 months due to competition for customer shopping baskets and as inflation returns to a very low single digit range,” Banducci said.
Woolworths Food Company’s Own and Exclusive Brand sales grew 2.3 per cent, with item growth of 1.8 per cent as customers shifted more of their basket to the value offered by own brand.
Long Life sales increased by 5.6 per cent with strong growth in Pantry, Frozen Foods and Household Care. Fresh sales increased by 1.8% with Bakery, Seafood and Everyday Chilled performing strongly during the Easter trading period.
Average prices in Q3 declined 0.2 per cent compared to the prior year with the moderation driven by deflation of 6.2 per cent in Fruit & Vegetables due to increased supply, as well as Meat, which declined by 9 per cent reflecting lower livestock costs and passing on lower input costs to customers.
Banducci said the ‘We can Help You Spend Less Today’ campaign helped consumers find value in their shop, including ‘Prices Dropped for Autumn’ on more than 400 essential products with an average price drop of 18 per cent. It added 3000 essential products on ‘Low Price’, including own brand products and over 6000 weekly specials.
Everyday Rewards campaigns including ‘Boost your Budget’ were also used to provide more ways for customers to save with Everyday Rewards scan rates increasing strongly on the prior year.
Woolworths launched a soft plastics recycling trial was launched in five supermarkets in Melbourne.
It also expanded its Mini Woolies program and officially launched it in New Zealand. The program was launched in 2018 and provides a hands-on learning experience in a simulated supermarket setting for students and job candidates with disabilities.
Four new Mini Woolies stores were opened during the quarter, with the first Northern Territory store opened at Henbury School in Tiwi. There are now more than 30 sites across the country.
In New Zealand, the inaugural Mini Woolies store was opened at Somerville School in Tamaki Makaurau in March.
