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Woolworths share price: where next as Q3 sales hit $16.5 billion?

After experiencing a surge in sales during March, Woolworths has seen its food and liquor sales moderate in recent weeks, as panic buying subsides.

WOW Source: Bloomberg

Coles Group (COL) revealed a strong set of quarterly results on Wednesday, reporting that quarterly revenue from its supermarkets division had jumped 13.8% as a result of Covid-19.

Unsurprisingly, when Woolworth Group (WOW) – a key rival of Coles – reported its own set of quarterly results, the supermarket giant also saw its food sales climb as a result of Covid-19-led pantry loading.

Overall, Woolworths delivered growth in all of its divisions bar one (hotels), recording third-quarter (Q3) sales revenue of $16,495 million, representing an impressive increase of 10.7% on the prior corresponding period.

'The last four months have been one of the most challenging periods in the history of Woolworths. Our team is doing an incredible job of responding to these unprecedented challenges and I want to thank them for their amazing efforts,' said Woolworths Group chief executive officer (CEO), Brad Banducci.

Woolworths share price: growth across the board, almost

During the quarter, the Group’s supermarkets division delivered strong growth, posting total sales of $11,171 million, representing an impressive growth rate of 11.3% on the prior corresponding period.

Comparable sales growth climbed 10.3% during the quarter, compared to just 4.2% a year ago

Illustrating just how pronounced Covid-19 ‘pantry loading’ became, it was noted that while during the first seven weeks of the quarter growth was mostly in line with prior periods, from 1 March onwards Woolworths saw a material uptick in sales, which 'peaked in the week ending 22 March with growth of over 40%'.

Woolworths New Zealand food division also witnessed strong growth, recording total sales for the quarter of $1925 million, representing a growth rate of 13.7% on the prior corresponding period.

Elsewhere, Big W and Endeavour Drinks also recorded sales growth for the quarter; while Hotels, which experienced government mandated closures from 23 March onwards, saw its sales drop off 12.9% for the quarter.

Woolworths (WOW) finished out today’s session down 25 cents, or 0.69%, to $35.78 per share.

Where next: an uncertain outlook

Like Coles, Woolworths noted that sales across its supermarkets and liquor divisions had begun to moderate during the early parts of April.

'Food sales growth in the first three weeks of April is in the mid-single digits with Drinks sales growth broadly back to pre-Covid-19 levels,’ it was noted.

Ultimately, the FY sales outlook remains difficult to predict given the deeply uncertain economic outlook.

Mind you, while the Covid-19 pandemic may have led to an increase in quarterly sales, it has also created a number of new costs for the Group – which are expected to remain into Q4.

Moreover, looking forward, the outlook remains one marred by uncertainty, with Woolworths’s management team noting that:

'The longer-term impact of the crisis is uncertain however, in the likely event of a more challenging medium-term economic environment, the Group remains well positions through its focus on food and everyday needs, convenience (ecommerce and in-store) and value.'

How to trade Woolworths – long or short

What do you make of Woolworths quarterly results: do you see bullish or bearish opportunities? Whatever your view, you can use CFDs to trade the likes of Woolworths and Coles – long or short through IG’s world-class trading platform now.

For example, to buy (long) or sell (short) Woolworths, follow these easy steps:

  1. Create an IG trading account or log in to your existing account
  2. Enter ‘WOW’ in the search bar and select it
  3. Choose your position size
  4. Click on ‘buy’ or ‘sell’ in the deal ticket
  5. Confirm the trade

The information on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG Bank S.A. accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer.

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