Woolworths NZ supermarket sales fell 6.1% last quarter

Wednesday 16th July 2008

Woolworths, the Australian retailer interested in acquiring Warehouse Group, said supermarket sales fell in New Zealand last quarter amid waning consumer demand.

New Zealand supermarket sales fell 6.1% in the company's fiscal fourth quarter, after adjusting to reflect the impact of Easter, Woolworths said in a statement. Sales were A$947 million in the latest 13 weeks, it said.

Sales reflected "the tighter macroeconomic environment in New Zealand and a decline in the growth of the overall market in the fourth quarter," the company said.

Consumer confidence slid to a 17-year low, according to a survey released last month. Soaring prices for food, fuel and credit have reduced households' spending power as the economy contracts.

New Zealand food prices rose 8.2% in the year ended June 30, the fastest annual increase in 18 years, according to government figures yesterday.

Woolworths and New Zealand grocery cooperative Foodstuffs are awaiting a court ruling on whether they can lift their respective 10% stakes in Warehouse Group, giving them a larger retail footprint and potentially heading off a rival. Warehouse has opened hypermarkets, which include a supermarket and department store.

A slackening New Zealand economy probably won't deter Woolworths chief executive Michael Luscombe from seeking to acquire Warehouse, Deutsche Bank analyst Kristan Walker said, according to a report in the Age newspaper yesterday.

Easter fell in the fiscal third quarter of 2008 and the fourth quarter of 2007.

By Jonathan Underhill

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