Australia’s Woolworths sales rise on higher prices, grocery demand stumbles By Reuters

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© Reuters. FILE PHOTO: People walk past a Woolworths supermarket following the easing of restrictions implemented to curb the spread of the coronavirus disease (COVID-19) in Sydney, Australia, June 16, 2020. Picture taken June 16, 2020. REUTERS/Loren Elliott

(Reuters) -Australia’s biggest supermarket chain Woolworths Group said on Thursday first-quarter sales rose 1.8% as higher shelf prices and strength in its wholesale business offset a slowdown in grocery demand.

Retailers have been raising prices to cope with higher fuel and ingredient costs that have pushed Australia’s inflation to its fastest pace in 32 years.

“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,” Chief Executive Brad Banducci said.

Grocery chains had recorded blistering demand during COVID-19 lockdowns due to panic-buying.

Last week, rival Coles Group (OTC:) Ltd CEO Steven Cain said cost-of-living pressures were changing customer behaviour.

Total group sales for Woolworths rose to A$16.36 billion ($10.39 billion) in the first quarter and narrowly beat a Jefferies estimate of A$16.33 billion.

However, comparable sales at its largest division – Australian Food – dropped 1.1%. In contrast, Coles saw comparable supermarket sales rise 2.1%.

Average prices for Australian Food rose 7.3% over the quarter, while Coles had reported price inflation of 7.1% and flagged further increases.

Banducci also said ongoing supply-chain volatility and the possibility of another wet summer will be key challenges for the firm to navigate.

The country’s heavily populated east coast experienced flooding earlier this year, worsening cost-of-living pressures.

Woolworths’ topline growth was also helped by its Australian business-to-business segment, where sales rose 26% to A$1.20 billion.

($1 = 1.5746 Australian dollars)

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