Woolworths' Countdown chain posts 3.4% sales growth in third quarter, average prices fall

Wednesday 2nd May 2018

ASX-listed retailer Woolworths Group's Countdown chain of supermarkets in New Zealand recorded a 3.4 percent gain in sales in the third quarter.

Sales rose to $1.63 billion in the 13 weeks ended April 1 from $1.58 billion a year earlier, according to Sydney-based Woolworths' third-quarter sales statement. Adjusting for the timing of Easter, comparable sales were up 3.8 percent, it said.

Countdown competes with Foodstuffs in New Zealand, a retail group comprised of two cooperatives that has the Pak'nSave, New World and Four Square chains. Foodstuffs North Island and South Island had combined sales of $9.36 billion in their 2017 year while Woolworths' Countdown chain, which it calls its New Zealand Food division, had sales of $6.2 billion.

The company closed two Countdown stores during the latest quarter to end up with 182. It opened one franchise store, leaving it with 68. Under its volume productivity metrics, New Zealand Food recorded an Easter-adjusted gain of 4.3 percent in comparable transaction growth which partly offset a 1.8 percent decline in 'items per basket'.

"Higher sales growth has been consistent with improving net promoter scores (NPS) and has benefitted from the previously announced investments and key initiatives including investments in team hours, fruit & vegetables and online," Woolworths said. "Online sale momentum continued with growth driven by a strong increase in pick-up sales," it said, without giving details.

Net promoter score is a management tool that can be used to gauge the loyalty of a firm's customer relationships. Foodstuffs North Island has used such a tool for the past two years, reporting a score of 77 percent for its Four Square outlets, 67 percent for New World and 65 percent for Pak'nSave in its 2017 annual report.

Average prices fell 1.1 percent in the quarter, which the retailer said was "largely due to lower prices in grocery." Prices fell 1 percent the same quarter the previous year. New Zealand grocery food prices were unchanged in March from February, when they fell 0.7 percent, according to Stats NZ's food price index.

For the parent Woolworths, third-quarter sales rose continuing operations rose 4.3 percent to A$14.2 billion.

Woolworths stock rose 0.9 percent to A$27.98 on the ASX and has gained 2.4 percent this year.

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