Sales at Woolworths are flatlining

Marianna Massey/Getty Images for Woolworths

The Woolworths business isn’t growing as it restructures to restore sales momentum.

Food and liquor sales at the supermarket hit $10.7 billion, a rise of just 0.4%, for the April quarter, and the normally busy Easter period was a disappointment with adjusted comparable sales falling by 0.9%.

A short time ago, Woolworths shares were down 2.3% to $21.73.

“Good progress has been made on delivering better prices and improved service to our customers,” says new CEO, Brad Banducci, who launched a wide-ranging review of the business.

“The sales performance in Australian Supermarkets continues to be impacted by high levels of deflation, predominantly from our price investment. However, we are encouraged that customers are starting to notice the improvements we are making.

“It will be a three to five year journey to rebuild Woolworths supermarkets, but we are confident we are on the right track.”

Woolworths is under attack from discount players including Aldi, the German chain now with a dollar value market share of 12.1%.

However, main competitor Coles is growing, with sales up by 5.9%.

At Woolworths average prices were down 2.4%. Excluding tobacco, average prices dropped 3.5%.

Home Improvement sales for the quarter were $507 million, an increase of 11.4%.

The company expects to invest a further $150 million, mostly in price, customer service and loyalty, in the second half of the year.

Woolworths expects to post a small loss in 2016 in general merchandise.

With a review in progress, “it is too early to quantify the financial impact and we will provide an update at or before our full year 2016 results”.

In February, Woolworths posted a loss of $972.7 million for the first half of the financial year, its first for more than 20 years, driven by a massive $1.9 billion write down in the value of the troubled Masters hardware business.