Woolworths NZ lifts first-half sales 2.3 percent amid slow inflation, tough trading conditions

Thursday 31st January 2013

Australian supermarket chain Woolworths, which accounts for about 40 percent of New Zealand's supermarket sales, increased first-half revenue 2.3 percent on this side of the Tasman, even as trading conditions remain tough and consumer price growth non-existent.

The group's New Zealand supermarkets increased sales to $2.94 billion in the 27 weeks ended Dec. 30 from $2.88 billion a year earlier, the ASX-listed company said in a statement. Total group sales rose 3.2 percent to A$30.68 billion, including a A$642 million contribution from its Dick Smith Electronics stores, which it sold in the period.

"In a market characterised by low growth and even lower inflation, retail trading conditions have become increasingly challenging," said David Chambers, managing director of local supermarket unit Progressive Enterprises. "Our strong brand, new store formats and continually improving offers have enabled us to continue to increase our market share throughout the half."

Woolworths New Zealand, the local holding company, boosted annual profit 29 percent to $128.9 million in the 2012 financial year on a 3.5 percent increase in sales, according to documents lodged with the Companies Office.

Those earnings gains have come in a period when inflation is easing, and government figures this month showed the consumers' price index fell 0.2 percent in the December quarter.

The Countdown Supermarkets food price index showed inflation of just 0.1 percent in the six-month period, with second-quarter deflation in dairy products.

Woolworths said it passed on lower costs of milk, butter and cheese to its customers, and held more frequent promotions.

Shares in the Australian group fell 1 percent to A$31.35 on the ASX today.

BusinessDesk.co.nz

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