Woolies warns of ‘shift’ in spending

Supermarket giant Woolworths faced a “challenging” March quarter, its chief executive has admitted, amid shifting spending by its inflation-weary shoppers and continued criticism over its price settings.

Reporting its March quarter results on Thursday, the retailer posted total sales of $16.8bn for the period, up 2.8 per cent year-on-year.

The result was buoyed by its Australian food division, which reported sales growth of 1.5 per cent to $12.6bn, while its local business-to-business segment grew 3.2 per cent to $1.1bn.

Sales across its New Zealand supermarket operations were more subdued, rising 1.4 per cent to $AU1.9bn.

Despite the uptick in sales across its supermarket segment, turnover at discount department store Big W slipped 4.1 per cent from the year prior to $1bn in the March quarter, reflecting heightened consumer caution.

Outgoing Woolworths chief Brad Banducci said consumer sentiment in Australia and New Zealand has been weak for some time, with customers facing elevated living costs.

“Since Christmas we have seen a noticeable change in consumer behaviour as customers have adjusted their budgets and spending following the holiday period,” Mr Banducci said.

“We expect trading conditions to be challenging for the next 12 months due to competition for customer shopping baskets and as inflation returns to a very low single digit range.”

“However, we are well positioned to manage this more challenging environment through an ongoing focus on our customers and team, and our end-to-end productivity plan.”

Amid intense scrutiny over accusations that Woolworths and its main rival Coles have unreasonably raised prices during the recent bout of inflation, Mr Banducci claimed food prices had continued to moderate in the March quarter.

“Our measure of food inflation is now below food consumer price inflation in both Australia and New Zealand,” he said.

Excluding tobacco, shelf prices fell 0.7 per cent in the March quarter across Woolworths’ Australian supermarkets.

On Wednesday, Woolworths sold a 5 per cent stake in Dan Murphy’s and BWS parent Endeavour Group. The sale, worth $468 million and priced at $5.22 per share will be returned to the supermarket giant’s shareholders.

Woolworths now holds just a 4.1 per cent stake in Endeavour, and has committed to retain its remaining shareholding for at least 60 days.

Endeavour was broken off from Woolworths in June 2021, leaving the grocery giant with a

14.6 per cent stake in the company.