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Woolworths Announces $14.9 Billion in Sales for Third Quarter

Woolworths Announces $14.9 Billion in Sales for Third Quarter
Total third quarter sales declined 0.3% to $14.9billion as major rebuilding and reinvestments continue to weigh on sales momentum.
May 03, 2016 By Simon Herrmann Tags: WOW

Australian retail giant Woolworths Limited (ASX:WOW) released its third quarter sales update for the 13-week period ended 3 April 2016. Total third quarter sales declined 0.3% to $14.9billion as major rebuilding and reinvestments continue to weigh on sales momentum.

Food and Liquor Sales Rise 0.4%

The company’s Australian Food and Liquor sales rose 0.4% for the quarter, to $10.7 billion as consumer transactions continued to increase but were offset by lower prices and items per basket. New Zealand supermarket sales rose 3.8% for the quarter, as both price and service perceptions improved as Woolworths continued to lower its price of groceries through its ‘Price Down’ program.

General Merchandise sales shrunk 4.6% to $865 million, as the comparable sales were impacted by a disappointing customer response to the new season ranges.

Petrol sales for the quarter declined 8.8% to $1.1 billion, affected by a 8.1% drop in fuel prices. While premium fuels and diesel sustained strong growth, the total sales figure was impacted by lower grade fuels and LPG.

Woolworths recently announced that the company is planning to sell the Home Improvement division. The total number of Masters and Home Timber stores remained constant at 63 and 43 respectively. Masters sales improved 30% during the quarter but Home Timber and Hardware sales declined 5.5% on the previous year.

Woolworths’ Chief Executive Officer, Brad Banducci commented on the company’s performance: “The sales performance in Australian supermarkets continues to be impacted by high levels of deflation, predominantly from our price investment. However, we are encouraged that customers are starting to notice the improvements we are making. It will be a three to five year journey to rebuilt Woolworths Supermarkets, but we are confident we are on the right track.”

Woolworths is Aware of the Challenging Outlook

Woolworths is currently in its first year of the three to five year transformation journey to re-establish sales growth. The company anticipates to spend a further $150 million in 2H16 on price, customer service and loyalty programs.

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Simon Herrmann Author: Simon Herrmann May 03, 2016

Simon is a financial analyst at independent research firm Wise-owl specialised in small-mid cap growth opportunities and ethical investment opportunities. Simon's aim is to disrupt the cliché approach to investment decision making as he believes that socially and environmentally responsible behaviour is a necessity to long-term wealth creation. Simon has a deep fundamental understanding of the global financial landscape and has compiled 300+ research reports, valuations and corporate appraisals. Simon is commonly featured in major media outlets and his research is published weekly in The Australian.

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