Business

Australia’s Woolworths says inflation its main concern as Q3 sales jump

Folks stroll previous a Woolworths grocery store following the easing of restrictions applied to curb the unfold of the coronavirus illness (COVID-19) in Sydney, Australia, June 16, 2020. REUTERS/Loren Elliott

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  • Q3 gross sales up about 10%; Australian Meals gross sales up 5.4%
  • Sees influence to New Zealand grocery store chain earnings in H2
  • Says retailer inventory service ranges beneath regular ranges

Could 3 (Reuters) – Australia’s largest grocery store chain Woolworths Group Ltd (WOW.AX) stated on Tuesday that managing the consequences of inflation remained its predominant concern after gas costs and provide chain blockages contributed to a surge within the worth of third-quarter gross sales.

The Sydney-listed grocer posted a 4.4% leap in meals gross sales for the March quarter to A$11.4 billion ($8.1 billion), bettering rival Coles Group (COL.AX), as Australia’s inflation grew at its quickest tempo in 20 years. That has prompted near-unanimous expectations of a central financial institution charge rise on Tuesday.

However Woolworths stated the quarter was marked by COVID-19 associated workers shortages and provide chain disruptions because of heavy flooding on the densely populated east coast. It stated buying and selling patterns had stabilised however that it continued to be hampered by rising prices related to a world transport glut.

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“Managing inflationary stress continues to be the main focus for us,” CEO Brad Banducci stated on a name with reporters.

Meals costs at Woolworths grew 2.7% within the quarter – far lower than the 5.1% official inflation charge, and fewer than the three.3% at smaller rival Coles – however Banducci stated “within the present setting it stays unsure” if the corporate may hold its personal costs to date beneath the broader financial system. learn extra

Woolworths shares have been up 0.5% in morning buying and selling, towards a small decline within the broader market (.AXJO) as analysts welcomed its larger than forecast quarterly gross sales.

Gross sales “have been effectively forward of our expectations”, stated Jeffries analysts in a observe. “Inflation accelerated (however) there are not any indicators of fixing client behaviour.”

On the media name, Banducci stated Woolworths had not but seen a sample of “down-trading” – when customers purchase cheaper alternate options – to resist inflation, however anticipated a shift from contemporary to frozen greens and from crimson meat to pork and hen.

Together with its division retailer chain Massive W, Woolworths stated general gross sales grew 9.7% to A$15.1 billion within the quarter. The corporate didn’t give any revenue forecasts.

($1 = 1.4152 Australian {dollars})

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Reporting by Sameer Manekar and Harshita Swaminathan in Bengaluru; Modifying by Shailesh Kuber & Shri Navaratnam

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