Woolworths sees good sales momentum, gains lead over Coles

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A shopper walks out of a Woolworths store in Sydney, Australia, May 12, 2016. Reuters/David Gray

Woolworths revealed its rate of growth on Tuesday, and the figures were ahead of Coles. The supermarket recorded comparable food sales growth of 4.9 percent for the first three months of the financial year, while its rival handed down 0.3 percent growth last week, said to be the lowest rate of growth since Wesfarmers bought the business.

Brad Banducci, Woolworths' chief executive, commented on the results, saying one of the areas they have been struggling with has been the big basket family. They have reportedly seen shrinking items per basket.

The latest figures from Woolworths revealed that it managed to grow food sales to $9.63 billion in the 14 weeks to October 1. That is a rise of 4.7 percent in gross numbers.

The growth comes despite drop in grocery prices, falling 2.4 percent during the quarter. Customers were offered cheap tomatoes, lettuce and berries.

Woolworths, Banducci said, was now competitive with Coles. They have also seen jump in liquor sales at Woolworths' BWS and Dan Murphy's chains, a rise of 3.8 percent to $2 billion in the first quarter and a jump of 3.3 percent in comparable terms. Higher online sales also translated to sales growth, the company added.

Across the Woolworths group, total sales jumped $513 million from the same period last year to $14.5 billion. "We have continued the good sales momentum from the second half of FY17 and made pleasing progress against our key priorities over the quarter," Banducci said, according to Sydney Morning Herald. Banducci added that they were happy with the recent progress, then recognised that there remains much more to do and said their focus is now firmly on the Christmas trading period.

The company is keeping its focus on creating better customer and team experiences. “We are also conscious of the changing needs of our customers who are looking for increasing levels of convenience and we are working hard to meet this need, with pick up one of the many initiatives we have underway,” Banducci said.

Over the past two years, Woolworths has spent more than $1 billion cutting prices, updating stores and investing in service. Based on its latest sales report, it is now gaining momentum against Coles and newer rivals Aldi and Costco. Meanwhile, Coles managing director John Durkan expects sales to perk up in the second half of the year as long as "nothing dramatic" happened in the market.