Woolworths reports $11.1 billion food sales, up 10.3 per cent

The major department store has reported a bumper quarter but its result has fallen short of arch rival Coles.

Woolworths has reported a 10 per cent jump in food sales at its Australian supermarkets for the third quarter, due to panic buying amid the coronavirus pandemic.

The retail giant reported food sales of $11.1 billion for the 13 weeks to April 5 – which is 10.3 per cent comparable growth.

The result falls short of the growth experienced at chief rival Coles, which on Wednesday reported an unprecedented 13.1 per cent sales growth and $8.23 billion in third-quarter supermarket revenue.

Woolies said sales growth peaked at 40 per cent in the week ended March 22. Toilet paper, cleaning goods, rice and pasta were the most popular items.

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Woolworths chief executive Brad Banducci said the last fourth months had been one of the most challenging periods in the company’s history. New Zealand’s total food sales had a 13.4 per cent jump to $1.8 billion. Sales at Big W climbed 9.9 per cent to $866 million, and Endeavour Drinks rose by 8.9 per cent to $2.2 billion.

Woolworths’ hotels recorded a 2.4 per cent rise to $350 million, despite being closed from March 23 due to social distancing restrictions.

However this division will make a loss before interest and tax of $30 million to $35 million per month while pubs are closed.

Food sales have soared at Woolworths in the wake of the pandemic lockdown.

Woolworths said sales growth in April has moderated compared to March. The many measures put in place to cope with the earlier sales boom will cost between $220 and $275 million in the fourth quarter.

About 22,000 temporary staff were hired and continue to ensure social distancing, improved warehouse operations, security and cleaning. Management hopes sales can offset these costs.

Mr Banducci said the outlook for the rest of the financial year was uncertain, but Woolworths was in a strong position.

Permanent ‘front line’ staff such as cashiers will be paid a bonus at the end of the financial year due to their work during the pandemic.

Woolworths is continuing to compensate the more than 7000 current and former supermarket staff it underpaid, after learning of the errors last year.

These payments will be finished by the end of the 2020 calendar year. Shares in Woolworths were down by 2.08 per cent to $35.28 after 15 minutes of trade on Thursday, but have only dropped by 0.36 per cent in 2020 against an 18.3 fall for the wider ASX/200.

The coronavirus lockdown has changed the way we shop. Picture: David Mariuz/AAP

COLES SALES BOOST

Coles booked an unprecedented 13.1 per cent growth in quarterly comparable sales across its supermarkets, but panic-buying consumers had already changed their habits as they stay indoors due to coronavirus restrictions.

Coles said total supermarket sales revenue for the third quarter rose to $8.23 billion – up 13.8 per cent on the same time last year – as shoppers stockpiled groceries in the face of looming COVID-19 lockdown measures.

For comparison, a successful 2019 Christmas shopping period yielded second-quarter comparative sales growth of 3.6 per cent across Coles’ supermarket network.

Since the start of April, however, comparable sales growth has broadly trended back towards pre COVID-19 levels.

Chief executive Steve Cain said shoppers were packing their baskets with more food but shopping less, meaning less convenience and impulse products.

There has also been a move towards more cooking and baking from scratch, supported by the success of TV cooking programs such as MasterChef.

“(People) are eating more fresh food,” chief executive Steve Cain said. “Veg sales are the highest penetration they have ever been.”