Woolworths lifts Q1 sales, says food prices moderating

The news: Supermarket giant Woolworths has lifted first quarter sales, led by a solid performance in its foods business, even as prices continue to moderate.

The numbers: Total sales for the 14 weeks ended 1 October rose 5.3% to $17.22 billion, slightly below market estimates. Sales at its Australian supermarkets were up 6.4%, and rose 5.8% in New Zealand. Big W sales fell by 5.5% in the quarter.

The context: Woolworths Group CEO Brad Banducci said inflation had moderated in the group’s fruit and vegetables and meats segments, leading to lower retail prices. Group sales remained solid for the quarter, with customer trends remaining broadly in line with the prior quarter with overall demand resilient. Woolworths is seeing customers, particularly families, young singles and couples, more focused on value, which has impacted its customer ratings when it comes to prices.

What they said: “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,” CEO Brad Banducci said.