Woolworths Group has overcome the impact of Omicron and severe flooding to post a 9.7-per-cent increase in like-for-like sales during the third quarter to $15.123 billion.
The growth rate was significantly higher than the 3.9-per-cent increase reported by archrival Coles Group last week. E-commerce sales soared 33.4 per cent year on year reaching $1.456 billion.
In the company’s core Australian food business, sales rose by 5.4 per cent, however average prices rose by 2.7 per cent reflecting the “widespread industry cost pressures,” said CEO Brad Banducci. Online food sales rose by 38.1 per cent.
Banducci said the ongoing impact of Omicron, as well as widespread flooding, resulted in another challenging quarter for the business.
“Despite the unfailing efforts of our teams, high levels of Covid-related team absenteeism and the disruption to our broader supply chain resulted in inconsistent customer shopping experiences and negatively impacted our customer metrics,” he said. Last month, entering the final quarter, there was more stability across the group but store stock service levels remain below normal levels.
The Big W discount department store business reported a 3.5-per-cent decline in sales, due to customers either being restricted from shopping in stores due to state government Covid-related rules or a reluctance by consumers to venture out in public. However, the business had shown an 18.3-per-cent increase in the same quarter last year and the chain’s three-year compound annual growth rate is running at 7.7 per cent. Online sales increased by 21.2 per cent.
“Trading momentum in Q4 to date has continued in Australian Food and Big W with strong Easter seasonal trade,” said Banducci.
Challenging quarter for New Zealand
Across the Tasman, the New Zealand business, trading as Countdown, experienced “a very challenging quarter” Banducci said.
“The impact of Omicron, which was felt later in the quarter, led to supply-chain disruption and out of stocks that peaked in March.”
While total sales increased by 3.8 per cent, average prices increased by 3.6 per cent. Online sales rose by 18.3 per cent.
The company expects the New Zealand food business to record a pre-tax profit in the range of NZ$120 – $140 million for the second half, which would represent a decline of 16-28 per cent on year.
“The expected reduction in profit is largely a function of higher Covid costs associated with keeping our customers and team safe and minimising disruption to our supply chain.”
Company-wide, Woolworths is focusing on “returning to a more stable operating rhythm and delivering consistently good shopping experiences for our customers” during the current fourth quarter.