Quake, floods feature in grocer's downgrade

Woolworths has downgraded its earnings guidance. Photo / Thinkstock

Sales at New Zealand supermarkets owned by Australia's Woolworths rose 4.1 per cent to $2.18 billion in the six months to January 2.

Woolworths, which operates the Countdown and Woolworths brands in New Zealand through Progressive Enterprises, also downgraded its earnings guidance.

The grocer cited uncertainty related to the Christchurch earthquake, the floods in Australia, lower consumer confidence levels, inflation, interest rates and global economic conditions for the downgrade.

It forecasts a 5 to 6 per cent rise in first-half net profit and a 5 to 8 per cent rise in annual net profit. It had expected annual profit to rise between 8 per cent and 11 per cent.

Chief executive Michael Luscombe said the company had had solid results in its New Zealand business. Sales for the second quarter in New Zealand supermarkets rose 3.5 per cent to $1.4 billion.

"The result was achieved in challenging economic conditions and an environment of low food inflation in New Zealand."

The company owns the Dick Smiths electronic store chain. Prices fell at Dick Smiths in New Zealand and sales decreased 4.3 per cent for the half and 5.9 per cent in the second quarter from a year earlier.

The Woolworths statement comes at a time of mixed results for retailers, with Kathmandu and Michael Hill reporting higher sales and The Warehouse reporting lower sales in the Christmas and New Year period.

- NZPA