Woolworths turnaround continues

WOOLWORTHS is expected to reveal its resurgence continues as it chalks up growth in first-quarter food sales.

The firm is due to release a quarterly sales update today.

Analysts at investment bank Citi say they expect positive trading momentum helped by promotional activities will offset the impact of lower fresh produce prices.

Rival Coles last week cited lower fruit and vegetable prices when it revealed its sales growth had slowed.

Citi has forecast supermarket sales at Woolworths to rise 5.1 per cent on a like-for-like basis, which covers stores that have been open for at least a year.

It would be up from a 0.7 per cent in the same quarter a year ago — a period that marked the start of the group’s turnaround in sales.

Coles’ like-for-like food and liquor sales rose 0.4 per cent the past quarter, lower than a 1.8 per cent lift in the same period a year ago.

In a report for investors, Citi analysts Bryan Raymond and Craig Woolford said like-forlike sales growth at Woolworths would be driven by an increase in items per basket and transaction growth “as the company wins back bigger-basket shoppers”.

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

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

They forecast Big W’s likefor-like sales to contract 6 per cent, partly due to its own turnaround efforts and stiff competition from Kmart, which is owned by Coles parent Wesfarmers.

Kmart’s like-for-like sales grew 4.9 per cent during the first quarter.

Shares in Woolworths climbed 0.8 per cent to $25.30 yesterday, while Wesfarmers was up 0.3 per cent to $41.72.