Woolies lifts its NZ supermarket sales

Woolworth's sales in New Zealand rose to $5.4 billion in the year to June despite tough trading. Photo / Greg Bowker

Australian supermarket chain Woolworths lifted sales in its New Zealand stores in the year to June, despite a tough retail environment.

In New Zealand, Woolworths owns Progressive Enterprises, which operates the Countdown, Foodtown and Woolworths brands.

New Zealand supermarket sales rose 3.4 per cent in New Zealand dollar terms to $5.4 billion. However they were down 0.5 per cent in Australian dollars because of currency fluctuations.

"We have grown market share, customer numbers, basket size and items sold in the year in an environment where the New Zealand economy remains challenging for retailers, particularly following the most recent Christchurch earthquake," Woolworths said.

New Zealand supermarket sales increased by 2.4 per cent in New Zealand dollar terms in the fourth quarter.

Two earthquake-damaged Countdown stores and one franchise store remained closed. This left Woolworths with 156 supermarkets in New Zealand, excluding franchisees.

In Australia, Woolworths said fourth-quarter food and liquor sales rose 4 per cent at stores that had been open for more than a year

"Trading does, however, continue to be impacted by tightened consumer spending with higher savings rates and higher interest rates, petrol and utility prices," the company said.

Australia's weak retail picture was one of the factors behind the Reserve Bank of Australia's shift in rhetoric this week to abandon talk of higher interest rates, which has also been blamed for the fall in consumer confidence.

Financial markets have long taken a more bearish outlook on the global and domestic outlook and priced in at least one cut in rates by year-end.

Confidence slid sharply in July to a two-year low.

Average prices in Australia fell 3.6 per cent in the second half, excluding tobacco, after a 4.3 per cent decline in the first half, due in part to rival Coles, owned by Wesfarmers, cutting prices in a fight for market share.

Supermarket sales held up better than Woolworths' discretionary businesses, including discounter Big W, which has been hurt by a cautious consumer mood that has dampened retail spending for a year.

Last week, top department store David Jones warned of an "unprecedented" worsening in sales, slashed its profit forecast and said there was no relief in sight for the industry.

Same-store sales at Big W rose 2.8 per cent in the fourth quarter and fell 2.5 per cent for the year.

Woolworths has previously forecast fiscal 2011 net profit growth of 5 to 8 per cent.

- Staff reporter, Agencies