Progressive stores help lift sales

A strong performance by New Zealand supermarket operator Progressive Enterprises has helped underpin an 8.5 per cent jump in the third-quarter sales of its Australian parent company, Foodland.

The result may drive interest in Foodland's New Zealand operations, which include the Countdown, Foodtown and Woolworths chains.

Foodland and a suitor for the Australian company, Metcash Trading, have announced plans to spin off the New Zealand arm of the company.

Progressive's third-quarter sales rose 4.5 per cent to $982.2 million in New Zealand dollar terms, bringing nine-month sales to $2.96 billion, a 4.3 per cent increase on the same period the year earlier.

In Australian dollar terms, the New Zealand supermarket sales were even better - up 10.5 per cent for the third quarter and up 10.1 per cent for the year.

That helped drive Foodland's total third-quarter sales up 8.5 per cent to A$1.59 billion ($1.71 billion). The group reported an 8.4 per cent increase in sales for the nine-month period, to A$4.79 billion.

Sales from Foodland's New Zealand franchise and supply division were also strong, rising 13.8 per cent to $75.1 million for the quarter. That took total third-quarter sales from New Zealand operations to $1.06 billion, up 5.1 per cent.

Foodland's Australian franchise and supply division achieved strong quarterly growth, recording an increase in sales of 9.9 per cent to A$274.4 million while third-quarter supermarket sales in Australia totalled A$338.1 million, up 0.8 per cent.

Foodland said Australian sales were continuing to show an improving trend despite extremely competitive trading conditions.

Higher petrol pump prices during the quarter continued to influence customer perceptions of the value of fuel discount schemes.

In New Zealand, sales were also showing a positive trend.

The refurbishment of Woolworths New Plymouth was completed and the replacement Woolworths store in the Queensgate Shopping Centre in Wellington began trading on the first day of the fourth quarter.

The refurbishment of Woolworths Paraparaumu was ongoing and refurbishments of three other stores - Countdown Glenfield, Woolworths Dinsdale and Mairangi Bay - had begun.

Three unprofitable Woolworths at Gull outlets, Wiri, Pakuranga and Botany, had been closed.

Foodland is the target of a hostile A$1.05 billion takeover bid by grocery wholesaler Metcash.

They confirmed last week they had begun talks although Foodland added it was still pursuing other possibilities.