Woolworths, the country's biggest supermarket chain, said total sales for its fourth quarter rose 5.1 per cent to $12.9 billion even as food price deflation crunched revenue.
Woolies shares ended the day up 27 cents, or 1 per cent, to $27.89, compared with a drop of about 1.7 per cent for the overall market.
Woolworths stocks up.Credit: Reuters
The company's key food and liquor divison saw same-store sales rise 1.3 per cent, beating the 0.5 per cent pace expected by analysts in a Bloomberg survey.
For the full year, sales rose 4.7 per cent to $56.7 billion, with food and liquor sales rising 3.8 per cent to $37.5 billion.
Woolworths has been engaged in a struggle for market dominance with Wesfarmers, the owner of Coles. Wesfarmers' Coles unit has outperformed Woolworths' supermarket division for the past 12 quarters.
Coles and Woolworths - which together control 80 per cent of Australia's grocery sector - have slashed the cost of basic items such as milk and bread to lure shoppers, and recently extended the price wars to fruit and vegetables.
Woolies said average prices at its supermarkets fell by 4.3 per cent in the quarter, due to the heavy discounting and promotions.
Analysts expect at least 3 per cent growth in core same-store sales at Coles, which relaunched its loyalty programme during the fourth quarter.
Woolworths also rejigged its rewards programme and cut prices during the quarter in response to Coles' moves.
So far in 2012, though, Woolies shares are up about 12 per cent compared with 9 per cent for Wesfarmers and 2 per cent for the ASX200. Wesfarmers shares ended the day up 6 cents, or 0.2 per cent, to $32.10.
Home improvement
Woolies' home improvement sales leapt 24.7 per cent as the company took on rival Wesfarmers's Bunning unit, and petrol sales rose 11.4 per cent.
Chief executive Grant O’Brien said the overall result was underpinned by growth in customer numbers, market share and units sold.
‘‘The last quarter, in particular, was a stronger end to what was a challenging year,’’ he said in a statement today.
‘‘Retail conditions remained subdued due to consumer and business uncertainty and an unseasonably cold and wet summer period.’’
Price war
Mr O’Brien said the tough retail conditions were exacerbated by significant price cuts due to Woolworths’ price war with Australia’s other supermarket giant Coles.
‘‘Importantly these results have been achieved at a time when our customers are benefiting from lower prices due to strong competition and continuing deflation across our businesses,’’ he said.
‘‘This confirms the resilience of our business as we continually adapt to the changing economic environment," said Mr O'Brien. "There is a lot of hard work ahead, but with a lot of upside as well.’’
Mr O’Brien said Woolworths was still planned to build new stores and open new businesses such as its home improvement chain Masters.
‘‘Despite the tough economic times, we will continue to invest in developing new stores, building our multi-option infrastructure and building new businesses like Masters, which will benefit the whole community through additional jobs and economic growth,’’ he said.
Big W, Dick Smith
In the fourth quarter, sales at discount department store Big W rose 1.6 per cent, helped by government cash hand-outs to households to stimulate the economy.
Woolworths gave no update on the sale of its electronics chain Dick Smith, which is suffering against no-frills chain JB Hi-Fi.
Greenhill Caliburn is advising on the sale.
More soon
BusinessDay, with Reuters, AAP