Woolworths rises above quake, flood disruptions

Michael Luscombe says the Woolworths result shows the retailer's business is improving. Photo / Bloomberg

Retailer Woolworths has reaffirmed full-year earnings guidance after reporting a 5 per cent lift in third-quarter sales.

Woolworths said sales for the 13 weeks to April 3 came in at A$13.56 billion ($18 billion), up 5.1 per cent from the earlier corresponding period.

Adjusted for Easter, sales rose 5.6 per cent, the company said yesterday.

"Despite the continuing deflationary effects across our businesses and the disruption caused by various natural disasters, this represents an improving sales trend," said chief executive Michael Luscombe.

At the half-year results presentation in February, Woolworths said it expected net profit after tax for fiscal 2011 to be in the range of 5 to 8 per cent higher than the A$2.02 billion achieved the year before.

Earnings per share was expected to grow between 6 and 9 per cent, Woolworths said in February.

The company yesterday reaffirmed the forecasts given in February.

It said lower consumer confidence, combined with uncertainty about inflation, potential interest rate rises and a strong Australian dollar would provide a "platform for a potentially subdued trading environment particularly in the discretionary sectors".

Woolworths said the New Zealand supermarket division remained challenging because of the Christchurch earthquake in February.

Four earthquake-damaged stores remained closed.

Shares in Woolworths gained A29c, or 1.09 per cent, to A$26.82.

Woolworths said it had grown in the first nine months of the trading year.

It had done an estimate on the costs associated with the New Zealand earthquakes and Australian floods not covered by insurance in its profit guidance, but the final amount had not been determined.

Woolworths operates supermarkets, Big W, Dan Murphy, Dick Smith, sells petrol and runs hotels.

The supermarket division, which generates the bulk of the group's revenue, reported a 5.2 per cent increase in sales in the third quarter.

The company said food and liquor sales in Australia in the third quarter rose 4.6 per cent to A$9.2 billion.

The increase was 5.2 per cent when adjusted for Easter, Woolworths said.

Meanwhile, comparable store sales were up 3.9 per cent in the quarter, when adjusted for Easter. Woolworths said it had increased market share, customer numbers, basket size and items sold in the 13 weeks to April 3.

"Trading continues to be impacted by tightened consumer spending with higher savings rates and higher interest rates, petrol and utility prices," Woolworths said.

It also increased the number of supermarkets in the group by a net two to 834 during the quarter, while the number of Dan Murphy stores rose by two to 135.

The company said its petrol sales, including Woolworths Caltex alliance sites, grew by 13.3 per cent.

Big W reported a 2 per cent rise in sales, or a flat result if adjusted for Easter, while the consumer electronics division sales rose by 6.7 per cent, or 5.9 per cent when adjusted for Easter.

Hotel sales were up by 6.8 per cent (6.4 per cent Easter adjusted).

Senior Woolworths executives were due to speak with the financial community later yesterday.

- AAP