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Woolworths Group reports 5.3% sales jump in first quarter

Woolworths Group (ASX:WOW) reported a 5.3% jump in first-quarter group sales, thanks to lower prices and solid demand for fruit, vegetables, and meat. The retailer said its key business, the Australian Food segment, and its fleet of Woolies and other outlets (Metros), saw better performance with an inflation-beating 6.4% improvement in sales, reaching $13.08 billion in the three months to September. This performance led Woolies group sales to reach $17.22 billion for the quarter, compared with $16.36 billion a year ago. In local currency, New Zealand grocery sales rose by 2.8% (which was half the rate of inflation).

Woolworths said inflation in its food businesses continued to moderate over the quarter as lower input costs in the fruit & vegetables and meat categories led to lower retail prices and increased demand. The ending of the La Nina wet period and emergence of the El Nino dry benefited the retailer as disruptions to supplies of fruit, vegetables, and meat disappeared and supplies became more plentiful, especially meat, as farmers reduced their stock before the onset of drought.

Woolworths noted that while customer trends showed resilience, some shoppers were more focused on value in all forms. CEO Brad Banducci stated, “Looking ahead, we have strong plans in place for the key Christmas and holiday trading period. While sales trends in October to date have remained broadly in line with the trend lines in 1Q, the trading environment remains uncertain, and value for money remains a key focus for our customers across all our businesses.”

For the first quarter, discount department store Big W saw a 5.5% fall in sales to $1.13 billion, despite showing modest improvement in the latter part of the quarter. Banducci commented, “While profit in the half to date has been impacted by the decline in sales and higher wage costs, the Christmas trading period will determine the success of the half,” as it always is for retailers, especially food giants like Woolies and rival Coles.

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