Monday, June 17, 2024

Woolworths makes progress in post-Covid trading environment

Woolworths Group reported sales of $16.4 billion in F23 Q1, up 1.8 per cent on the same period last year.

In its Australian food business, sales were below the prior year (down 0.5% to $12.2 billion) driven by the cycling of higher in-home consumption during extended Covid lockdowns in NSW and Victoria last year, as well as supply challenges in fruit and vegetables this year.

“Inflation continued to accelerate in Q1 compared to the prior year with average prices in Australian food increasing 7.3%,” Woolworths Group CEO Brad Banducci said.

“We continue to see early signs of customer purchasing habits changing, but it remains unclear how much of this relates to cost-of-living pressures compared to Covid normalisation.”

Adapting to shopper changes

Sales originating from Woolworths supermarket stores for Q1 were $10.6 billion, an increase of 0.5% (+1.7% excluding tobacco). WooliesX B2C eCommerce sales decreased 10.8% to $1.2 billion as customers returned to shopping in store.

Metro Food Stores sales increased 10.8% to $284 million supported by new store growth, a gradual recovery in on the go stores and shelf price inflation.

Woolworths Food Company’s own and exclusive sales declined 2.0%, impacted by fresh due to fruit and vegetables supply challenges and cycling elevated protein sales in the prior year. Long life sales were in line with the prior year, outperforming total sales growth with categories such as frozen foods and drinks benefitting from their strong value proposition.

During the quarter, one net new Metro and two CFCs were opened with 10 renewals completed. At quarter end, the total fleet includes 995 Woolworths Supermarkets, 91 Metro Food Stores, seven CFCs and two eStores.

Prepared for next quarter

Looking ahead, Mr Banducci said ensuring customers “Get their Woolies worth” remains the key priority for Woolworths in the next quarter.

“On Tuesday we announced our plans to deliver value this Christmas with a selection of seasonal favourites and entertaining essentials to be the Same Price or less than they were at Christmas last year,” he said.

“We also announced our Prices Dropped for Christmas program covering 150 products. This is in addition to our Low Price, Weekly Specials and personalised Member Boosts through Everyday Rewards.”

In the leadup to Christmas he said, Woolworths remains very focused on delivering a much-needed inspirational and affordable festive season for customers.

“Ongoing supply chain volatility and the possibility of another wet summer will be key challenges to navigate but we are seeing strong early sell through of seasonal lines and we remain cautiously optimistic for the period ahead,” he said.

View Woolworths full F23 Q1 results here.

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