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Woolworths NZ supermarket sales fell 6.1% last quarter

Wednesday 16th July 2008

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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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