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.
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.'
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