Foodland boosts Woolworths' Q4 sales

Australia's largest retailer Woolworths Ltd said its fourth-quarter sales increased 23 per cent, boosted by its New Zealand-based Foodland grocery and Taverner pubs chains and by higher petrol sales.

Woolworths maintained its full-year earnings guidance and said the result showed consistent growth against a background of tightening discretionary spending, particularly in the states of New South Wales and Victoria.

"Overall you would have to classify it as a solid result, but there is nothing spectacular there," Commonwealth Securities senior analyst Grant Saligari said.

Woolworths bought the New Zealand supermarkets of Perth-based grocery chain Foodland Associated Ltd in a A$3.3 ($4.02) billion carve-up of the company with grocery wholesaler Metcash last November.

Australian food and liquor, excluding petrol, posted a 4.3 per cent rise in comparable sales from stores open at least a year, while adjusted for the timing of Easter sales rose 3.6 per cent.

The sales rise compared with inflation in the fourth quarter of about 3.0 per cent, the company said. Easter, typically a strong sales period for groceries, was in the company's fourth quarter this year but in the third quarter last year.

Shares in Woolworths, which mainly competes with Coles Myer Ltd. added 0.9 per cent to A$20.20 ($24.61) in early trade in a wider market up 0.1 per cent.

Woolworths said its total sales increased to A$8.96 ($10.91) billion for the 12 weeks ended June 25 from A$7.28 ($8.86) billion a year ago.

Annual sales increased 20.4 per cent to A$37.7 billion, slightly above the company's forecast for growth this year of 15-20 per cent including the Foodland and Taverner acquisitions.

It also affirmed its previous forecast for net profit growth of 10-15 per cent, excluding the acquisitions, and profit growth of 15-23 per cent including Foodland and Taverner. It will report its results on August 21.

Woolworths said fourth-quarter comparable sales at its Big W discount variety stores increased 3.4 per cent, but when adjusted for the timing of Easter were down 0.6 per cent.

Budget-conscious Big W shoppers have been particularly sensitive to changes in fuel prices, and Woolworths said petrol prices were highest on average in May and June, compared with the rest of the financial year.

The sales result will be the last under CEO Roger Corbett, who will retire at the end of September. Michael Luscombe, who has led the supermarkets division, will take over the top job.

- REUTERS