Woolies discounts lure back shoppers

WOOLWORTHS’ s ales growth has surpassed arch rival Coles’ for the first time in almost eight years in a sign its aggressive discounting has lured shoppers back.

The supermarket giant’s comparable food sales, which removes one-off events, grew 3.1 per cent in the three months to January 1, and 1.9 per cent in the six months to that point.

Comparable food and liquor sales at Coles rose 0.9 per cent in the three months to December 31 and 1.3 per cent in the six months.

Woolworths’ improved performance comes after chief executive Brad Banducci instigated a $1 billion investment in lower food prices after his appointment to the top job a year ago.

That massive investment dented the supermarket chain’s earnings, which dropped nearly 14 per cent to $812 million in the half year, a sharper fall than the 2.6 per cent suffered by Coles in the same period to $920 million.

“We are very focused on never finding ourselves in the situation again where we are so far out on price,” Mr Banducci said. “We need to keep vigilant on price and improve communication of price but we have a lot of work to do with the in-store experience.”

He said availability of staff to help customers still needed to improve and more work was needed on the range of groceries and food.

The supermarket sales growth pleased investors and overshadowed a massive earnings fall at Big W as Woolworths shares jumped $1.07, or 4.2 per cent, to $26.57 in afternoon trade.

CMC Markets chief market analyst Ric Spooner said Woolworths had achieved the first essential element to its turnaround strategy.

Earnings at Big W plunged 89 per cent to $8.1 million as its comparable sales fell 6.3 per cent.