Woolworths is failing to keep up with its smaller rival Coles, recording slower sales growth in its local supermarket business since the start of the year as it grapples with a leadership transition and intense political pressure over shelf prices.

The country’s dominant supermarket described parts of the past financial year as “very challenging in every possible way”, although sales growth had started to improve. Some of those challenges – which included significant scrutiny over the company’s margins – were more acute for Woolworths than competitors like Coles and Aldi.