SYDNEY: Woolworths says the "huge benefit" it received from last year's stimulus payments gave the company two years' worth of growth which has now worn off, leaving it with lower growth than expected.
This comes after Australia's biggest retailer downgraded its fourth quarter sales guidance and reported a drop in
its discretionary businesses.
Woolworths increased third-quarter sales including petrol by 4.7 per cent to A$12.9 billion ($16.22 billion), according to a statement.
Woolworths chief executive Michael Luscombe said the company traded in "abnormal circumstances" in 2009.
"We probably got the equivalent of two years' growth in most of our businesses in one year [in 2009]," Luscombe said.
"We are going to have to work through those during this fourth quarter and I think there's going to be a tail right through to the first and most of the second quarter of next year."
Sales growth guidance for the year is expected to be between 3 per cent and 6 per cent from previously forecast upper single digits. Luscombe said he expected the retail sector to return to normal growth rates in calendar 2011. Woolworths reaffirmed its earnings guidance and expected net profit for financial 2010 to grow in the range of eight to 11 per cent.
In its supermarket division, sales increased 4.6 per cent to US$11.19 billion for the quarter. However, BIG W sales declined by 3.7 per cent, total consumer electronics sales declined by 2.4 per cent and hotel sales in the third quarter declined by 1.1 per cent.
Woolworths expected discretionary spending in the second half of 2010 to continue to be influenced by macro economic factors such as interest rates, petrol prices, confidence around employment and consumer attitudes to spending.
- AAP
