Australian grocer Woolworths’ Q1 sales rise on robust demand in food businesses

(Reuters) -Australia’s Woolworths Group reported a 5.3% rise in first-quarter group sales on Wednesday, supported by resilient demand for fruit, vegetables, and meat-related products due to lower prices and increased availability on its shelves.

Woolworths, one of the country’s biggest employers which makes up nearly 40% of all supermarket sales in Australia, said sales trends in October so far have been in line with its first quarter.

The grocer, however, warned that the trading environment remains uncertain amid stubbornly high inflation that is still ahead of the central bank’s target range of 2-3%.

While the cost-of-living pressures across Australia remained elevated, demand for groceries and essential items remained robust with supermarkets passing on the rising costs from suppliers to shoppers.

The country’s top grocer logged total group sales of A$17.22 billion ($10.94 billion) for the three months ended Sept. 30, compared with A$16.36 billion a year ago, and a Jefferies estimate of A$17.21 billion.

The company grew across all its business segments, though 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 company said average prices for the products it sold in the first quarter increased 2% over a year earlier, with a significant moderation compared to previous quarters.

Average prices for fruit and vegetables dipped 12% due to improved growing conditions with berries, lettuce, cucumbers, capsicum, and tomatoes all declining materially, Woolworths added.

Woolworths’ biggest earner, the Australian Food segment, posted a 6.4% growth in sales to A$13.08 billion during the reported quarter.

Across the Tasman Sea, total sales at its unit, New Zealand Food, rose 2.8% to A$2.06 billion owing to inflation as customers continued to face higher cost-of-living pressures.

Woolworths projects the unit’s first-half earnings before interest and taxes to be below the second half of fiscal 2023 and the prior year.

($1 = 1.5736 Australian dollars)