Woolworths Says 1Q Sales Rise Despite Drop in Food Prices

Woolworths Ltd. (WOW.AU) said total sales in its key Australian food division rose by nearly 5% in the fiscal first quarter, even though food prices fell amid tough competition in the supermarket sector.

Woolworths said sales in the 14 weeks to Oct. 1 totaled 9.6 billion Australian dollars (US$7.4 billion), an increase of 4.7% on year. The company said its performance was even better on a same-store sales basis, with sales rising by 4.9%.

Overall, Woolworths said it posted a 3.7% increase in total sales from continuing operations to A$14.5 billion, which include its New Zealand food division, Endeavour Drinks, Big W discount department store chain and hotels.

"While we are pleased with the progress during the quarter, there remains much more to do with our focus now firmly on the important Christmas trading period," said Chief Executive Brad Banducci.

Woolworths has been locked in a battle for market share with chief competitor Coles, owned by Wesfarmers Ltd. (WOW.AU), as well as discount German chain Aldi. E-commerce giant Amazon.com Inc. (AMZN) could increase pressure on existing players when it expands in Australia in the near future.

Woolworths said food prices dropped by 2.4% in the quarter, largely due to fruit and vegetables which reflected favorable growing conditions. The drop increased from the 2.1% decline in the first quarter of the previous year. Excluding fruit and vegetables, average prices in the first quarter of this fiscal year declined by 1.2%.

Sales at the struggling Big W chain rose by 2.5%, New Zealand food sales rose by 3.2% in New Zealand dollars and Endeavour Drinks sales rose by 3.8%.

Last week, Wesfarmers said food and liquor sales at Coles grew by 1.5% in the first quarter, but that a decline in food prices also accelerated.

-Write to Mike Cherney at mike.cherney@wsj.com

(END) Dow Jones Newswires

October 30, 2017 18:03 ET (22:03 GMT)