Woolworths sales surge despite ‘most challenging’ quarter

Sales at supermarket giant Woolworths have soared for the first quarter of the new financial year despite frequent store closures and COVID complications, thanks largely to a jump in online sales.

The retailer told investors on Wednesday morning its total sales across all divisions for the three months to the end of September grew 7.8 per cent to $16 billion, despite chief executive Brad Banducci labelling the period as Woolworths’ “most challenging COVID quarter”.

“[This quarter] has arguably been the most challenging COVID quarter for our business, with the Delta variant causing major disruptions to our supply chains and stores, especially in NSW and Victoria,” he said.

Woolworths and rival Coles raised concerns last month over a potential crunch on workers across their supermarkets and distribution centres, as hundreds of workers were repeatedly sent into isolation due to stores being listed as ‘tier-1’ exposure sites. This issue was fixed by the Victorian state government after pressure from the sector.

Woolworths’ sales result was driven by a few key factors, most notably the company’s e-commerce division, which spiked over 50 per cent to $1.87 billion for the period. The retailer’s recently acquired food services division PFD also made its maiden contribution to the company, more than tripling Woolworths’ B2B food segment sales to $656 million.

In-store supermarket sales fell for the quarter, down 0.6 per cent to $10.5 billion, though they rose 2.7 per cent on a comparable basis, which accounts for the impact of closed or new stores. This was lower than analyst expectations, however, with the market expecting comparable growth of around 3.5 per cent.

Department store Big W’s sales plummeted 17.5 per cent for the period due to tighter restrictions on store trade for the division, with a number of sites in Victoria and other states only able to open for click and collect. Due to this, e-commerce sales for the division more than doubled to $233 million.

COVID-related costs, such as cleaning stores, worker payments and supply chain charges, spiked to $102 million for the quarter, double what the business spent across the entire second half of the 2021 financial year.

Mr Banducci said trading through October so far had slowed as NSW and Victoria began to re-emerge from their lockdowns, though this had benefited Big W’s sales, which were improving but would be dependent on a strong performance come Christmas time.