KEY POINTS:
Woolworths' New Zealand supermarkets were the only dampener in the Australian retailing giant's stellar first-quarter sales results.
Total group sales for the 14 weeks to October 5 were up 9.6 per cent to A$12.8 billion ($14.3 billion), buoyed by an 8.3 per cent increase in Australian food and liquor sales, and a 30.4 per cent rise in petrol transactions across the ditch.
The New Zealand supermarkets division - Foodtown, Woolworths and Countdown - struggled in comparison, posting a 5.6 per cent decline in Australian dollar terms.
Its A$1.01 billion contribution, while representing a 3.1 per cent increase in New Zealand dollar terms, lagged behind the rate of inflation, with the consumer price index rising 1.5 per cent alone in the three months to September 30 to stand 5.1 per cent higher than a year ago.
Chief executive Michael Luscombe said it was a good result in light of the weaker New Zealand economy.
"We've absolutely done our very best to hold against the tide in New Zealand. There's no doubt the New Zealand economy - being a smaller economy on a world scale - is feeling the effects of what's happening a little bit more than some of the larger commodity-based economies."
New Zealand has also experienced more significant produce price inflation than Australia, and Luscombe said the company has had to absorb the additional costs in order to maintain its Auckland market share. Its overall food price inflation here was approximately 5.7 per cent - last year's fourth quarter rate was 4.6 per cent - reflecting the pressure on produce, perishables and bakery items.
He expects food price inflation in New Zealand to remain high for the next 12 to 18 months, due largely to dairy and grain-related product prices.
But the ongoing refurbishment of its supermarkets is showing positive results. The first two stores to be converted to a new format - Countdowns in Auckland's Botany and Greenlane - have shown double-digit sales growth.
* Luscombe said Woolworths expected to reach an "internal decision" as to what it would do with its stakeholding in The Warehouse Group in the next week. It holds a 10 per cent stake in the company.
WOOLIES IN NZ
* Total group first quarter sales for the 14 weeks to October 5 were A$12.8 billion, up 9.6 per cent on the previous year.
* The New Zealand supermarkets - Foodtown, Woolworths and Countdown - contributed A$1.01 billion, down 5.6 per cent from the previous corresponding period due to a 9 per cent shift in the AUD-NZD exchange rate.
* In New Zealand dollar terms, it represented a 3.1 per cent increase - lagging behind the 5.1 per cent rate of inflation for the year ended September 30.
