Woolworths Metro

Woolworths Metro Stores continue to feel impact of COVID-19

Woolworths Group has reported its third quarter results, with overall sales revenue up by 0.4 per cent to $16.6bn, as trading patterns stabilised, and the group cycled the significant impacts of COVID-19.

Woolworths Group CEO, Brad Banducci, said: “There were two very distinct trading periods in Q3; the first seven weeks before we began to cycle COVID and the second six weeks as we cycled the peak growth of the prior year.

“Group sales growth was strong in the first seven weeks of the quarter. For the final six weeks, food and drinks sales declined on the prior year as expected, BIG W remained strong, and Hotels’ sales growth started to recover as it cycled closures at the end of Q3 in the prior year.

“Customer scores across the Group remained strong but comparisons to the prior year are flattered by COVID-related availability and capacity issues in Q3 F20. Relative to Q2 F21, customer scores improved other than in our Australian and New Zealand Food businesses, which reflected typical seasonal trends.”

In Australian Food, total sales declined by 0.7 per cent to $11.1bn, following an increase of 8.2 per cent for the first seven weeks of the quarter.

Sales growth in the last six weeks was impacted by lower item growth and a reduction in average prices, particularly in March. The reduction in prices reflects deflation in categories like fruit and vegetables, category mix changes and cycling the temporary reduction in promotions in March last year.

In New Zealand Food, total sales declined by 6.9 per cent after being up 1.4 per cent for the first seven weeks.

Demand for e-commerce remained strong with sales increasing 90.5 per cent to $878m, with e-commerce penetration of 7.9 per cent, compared to 4.1 per cent in the previous corresponding period (pcp).

The moderation of sales growth over the quarter was broadly consistent across states other than where impacted by localised COVID lockdowns in Queensland (January), Victoria and Western Australia (February), and lower market growth in Victoria, which has been below the national average since the end of the extended Victorian lockdown in Q2.

Metro Food Stores sales for the quarter declined 15 per cent to $225m as stores continue to be negatively impacted by reduced foot traffic in CBD and on-the-go locations, with comparable sales in these locations declining by approximately 40 per cent.

Comparable transactions declined 12.0 per cent, partially offset by growth in items per basket of 8.6 per cent with customers continuing to shop less frequently but with larger baskets.

During the first seven weeks of the quarter, growth in comparable items was driven by an increase in comparable items per basket, partially offset by a decline in comparable transactions. For the final six weeks of the quarter, the decline in comparable transactions more than offset growth in items per basket.

Average prices declined 1.8 per cent (3.4 per cent excluding Tobacco) with all major long-life categories other than Tobacco declining. This was largely due to cycling the temporary reduction in promotions in March 2020 following the onset of COVID.

Banducci said: “In general, customer shopping behaviours continue to normalise. While food customers are still shopping less frequently, the growth in the number of items customers put in their baskets is slowing. Customers are also shopping more on weekends, statebased performance is becoming more balanced and there is less divergence in trading across the fleet, other than in CBD and transit locations. While we remain vigilant in looking after the safety of our customers and team, COVID costs continued to trend down over the quarter.”

During the quarter, six new stores were opened and two closed including two net new Woolworths Supermarkets and two net new Metro Food Stores with six renewals completed.

Four Metro Food Stores in metropolitan locations remain temporarily closed. At the end of the quarter, there were 1,068 stores, including 996 Woolworths Supermarkets and 72 Metro Food Stores.

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