WOOLIES’ FOOD POSTS Q1 UPTICK

WOOLWORTHS is expected to continue its recent resurgence with strong growth in first-quarter food sales.

The supermarket giant is set to release its quarterly report today and Citi analysts say its positive trading momentum improvements in its range and promotional activities will offset the lower fresh produce prices that have stymied sales growth at fierce rival Coles.

Coles last week cited lower fruit and vegetable prices when it unveiled a continued sales slowdown.

Citi has forecast Woolworths’ crucial comparable supermarket sales to rise 5.1 per cent, up from a 0.7 per cent lift in the same period a year ago. That marked the start of the group’s turnaround in sales.

Coles’ comparable food and liquor sales rose only 0.4 per cent, significantly lower than a 1.8 per cent lift in the same period a year ago. “(Woolworths supermarkets’) like-for-like sales growth will be driven by an increase in items per basket and transaction growth as the company wins back biggerbasket shoppers,” a note from Citi analysts Bryan Raymond and Craig Woolford said.

But the analysts say the group’s discount department store Big W will continue to be a drag.

“Big W is likely to remain challenged as the company invests in price and new merchandise gradually rolls out to stores,” they wrote.

They forecast Big W’s like-forlike sales to contract 6 per cent, due to its own turnaround efforts and competition from Kmart.

Kmart’s comparable sales grew 4.9 per cent in the first quarter.