Woolworths sales are outpacing Coles

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Woolworths posted a 4.7% increase to $9.6 billion in sales for the third quarter, keeping the supermarket group well ahead of rival Coles in terms of growth.

Comparable sales rose by 4.4%, benefitting from the shift in the timing of Easter compared to the same quarter last year. Adjusted for Easter, Australian Food comparable sales growth was 4%.

The numbers are running below the half year results posted in February when Australian food sales rose by 4.9% and comparable sales also rose by 4.9%.

Coles last week posted headline food and liquor sales for the third quarter of $7.8 billion, up 1.9%. Comparable sales were up 0.9%.

Woolworths shares have been rising. They closed yesterday at $27.74, up from $26.16 four weeks ago.

CEO Brad Banducci says he’s pleased with progress as Woolworths pivots from turnaround to transformation.

“We remain energised by the number of opportunities we see to continue to improve our business,” he says.

“Our focus for the remainder of FY18 is on delivering consistently good shopping experiences across all stores and days of the week, embedding current strategic initiatives including ‘Simpler for Stores’ and continuing to improve our digital experience.”

Traditional players in the supermarket sector are under increasing competitive pressure from discount players, including Aldi.

This has put downward pressure on prices. Industry analyst IBISWorld says Woolworths has invested significantly in reducing prices to compete with Coles and ALDI. Average prices at Woolworths fell by 2.1% last financial year.

In the third quarter, average prices at Woolworths fell 1.3% compared to the same quarter last year.

Fruit and vegetables deflation was high at 5.4% in the quarter, led by tomatoes and grapes. Fruit and vegetables deflation is expected to remain high in the fourth quarter.

Excluding fruit and vegetables and tobacco, average prices fell by 2.4%.

Online sales in Australian Food continue to grow strongly at 30%.

Woolworths ended the quarter with 1007 supermarkets and metro stores. One metro was opened and two supermarkets closed.

Sales for the 13 weeks to April:

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