By Ari Sharp
Sales growth at retail giant Woolworths slowed in the last three months of last year, with revenue growing 8.1% for the period, down from first-quarter growth of 9.6%.
But the sales data for the second quarter - covering the three months to January 4 - were a credible result given the economic environment, and show that consumers are continuing to make staple purchases while cutting back on discretionary items.
The company has now forecast sales from continuing operations to grow in the ''upper single digits'' for the full year, excluding sales from its highly volatile petrol business.
''Factors such as inflation, fluctuating petrol prices, interest rates, rising unemployment and consumer confidence levels are very difficult to predict in the current environment,'' the company said in a statement.
By the close, shares in Woolworths were up 61 cents, or 2.3%, to $26.81.
The company's network of nearly 900 supermarkets and liquor stores in Australia posted 7.1% comparable store sales growth for the second quarter, leading the company to say that it was ''pleased with the Christmas trading period'' and had experienced ''increasing numbers of customers shopping in our stores''.
A quarter earlier, food and liquor sales grew 6.0% on a comparable store basis, which includes only stores open at least a year.
At general merchandiser Big W, comparable store sales rose 6.4% in the second quarter, the ninth consecutive quarter of positive comparable sales expansion for the 155-store chain.
''Results in the home entertainment, childrens wear and everyday needs categories were particularly pleasing,'' said Julie Coates, general manager of Big W.
Woolworths chief executive Michael Luscombe later told a teleconference that the Federal Government's stimulus efforts were having an impact.
''There is no doubt that the government fiscal stimulus was a positive for us,'' Mr Luscombe said. ''I've read commentary elsewhere that it didn't do much.
''But we saw it come in for the working families, which it was targeted (at) and we saw it in the shops and shopping centres where they would be.''
In October, the federal government announced a $10.4 billion package to help Australia counter the global economic crisis.
This included $3.9 billion in support payments for low and middle income families.
Mr Luscombe said basic items were popular over the Christmas period.
''There is one line of underpants that we sell in Big W, one of our private labels, and we sold about 680,000 pairs that in December alone,'' Mr Luscombe said.
''We are also having a very strong back-to school (period in) the first three weeks of January.''
In consumer electronics, the company's Dick Smith Electronics and Tandy stores posted 6.5% growth for the second quarter on a comparable store basis, an increase on the 4.9% growth of the first quarter.
The company has restructured 33 stores in the Dick Smith chain, and said those stores had reported sales growth in excess of the overall average. New store openings meant the overall sales growth in consumer electronics for the second quarter was 15.8%.
But the company warned the sales growth may not translate into increased profitability, saying that ``it should be noted that the sales result has been delivered at a lower margin as we transition out of certain categories and experience both changes in sales mix and a highly competitive market''.
In its New Zealand supermarket business, Woolworths reported that second quarter comparable store sales picked up 3.0% in local currency terms, matching the growth in the first quarter. The figures fall short of the 5.8% food inflation for the half year, suggesting in sales in real terms are shrinking.
When converted into Australian dollars, overall sales in the first half dipped 1.2%.
In petrol, sales through the company's own sites and those included as part of an alliance fell backwards 3.7% in the second quarter on a comparable store basis. The company linked sales performance to the reflected reduced price of petrol.
The company's hotel business has returned to comparable sales growth. Sales increased 0.9% in the second quarter after falling 0.8% in the first quarter.