Woolworths set to overtake Coles

IS THIS a fresh start for the Fresh Food People? Woolworths is tipped to overtake Coles in sales growth for the first time in more than seven years.

Woolworths’ turnaround is taking shape. Picture: Grant Turner/Bloomberg

WOOLWORTHS’ $1 billion spending spree looks set to pay off, with the nation’s biggest supermarket on track to overtake rival Coles in sales growth for the first time in more than seven years.

Analysts believe Woolworths, which has spent $1 billion cutting prices to compete with Coles and discount retailer Aldi, will beat its rival in comparable food sales in the second quarter.

In October, Woolworths reported a rise in first-quarter comparable food sales — which excludes store openings and closures — of 0.7 per cent, ahead of analysts expectations of a 0.4 per cent rise.

It was the first positive reading in nearly two years.

Coles’ comparable sales rose 1.7 per cent in the same period — its slowest growth since 2009 — and analysts predict that number could fall as low as 0.5 per cent in the next quarter, with Woolworths tipped to report sales growth of around 1.5 per cent.

Fairfax reported Wesfarmers chief executive Richard Goyder had been “softening up” investors ahead of the company’s half-year results release next month.

“[Mr] Durkan has been pretty open saying that if you spend $1 billion on price, of course there’s going to be an impact,” one analyst told Fairfax.

“Richard Goyder has told people Woolworths’ like-for-like [sales growth] will be better than Coles and there’s no doubt in my mind Woolworths will have crossed Coles.

“Having said that, Coles is competing with second-quarter like-for-like sales growth of 5.3 per cent from the same time last year and Woolworths is competing with a negative 1.2 per cent result.”

It comes after Woolworths appointed longstanding Tesco executive Claire Peters to lead its supermarkets in the fight against Coles and Aldi.

Ms Peters will report to Woolworths chief executive Brad Banducci, who will continue to play an “active leadership role” in the supermarkets, digital, metro and New Zealand supermarkets businesses, the company said in a statement on Monday.