Woolies top of the tree at Christmas
WOOLWORTHS has triumphed over Coles for the third Christmas in a row, investment bank Morgan Stanley says.
Woolworths grew like-forlike sales by 3 per cent during the busy Christmas trading period, while Coles could only manage a 2 per cent rise, an analysis by Morgan Stanley has found.
Like-for-like sales is a closely watched industry metric which strips out the impact of stores opening or closing.
The investment bank also said non-food retailers suffered a weak Christmas trading period, with foot traffic down significantly in December.
“Falling house prices, a greater focus on Black Friday driving discounting, and weaker equity markets all look to have held the Australian consumer back this Christmas,” it said in a note to clients.
Foot traffic was down and the drop could not be explained only by consumers browsing online and then transacting instore, it said.
The latest retail update come ahead of the release of National Australia Bank’s cashless sales report for December, which is due out later this month.
Morgan Stanley said total retail sales grew by 0.4 per cent in November — higher than what most analysts had been expecting but down on the prior year when growth clocked in at 1.2 per cent.
“This could suggest less pull forward of demand from Christmas sales this year, or that overall sales growth over the last two months of the year was weaker,” the bank said.
New vehicle sales in December fell 14.9 per cent in the largest drop since the global financial crisis, it said.
Rising food prices linked to drought and less discounting activity helped lift the dollar value of sales, Morgan Stanley said.
“Food prices are rising, which we think is partly driven by higher input costs linked with the drought, but also less supermarkets’ promotional activity,” the bank said. “Our channel checks with suppliers indicate that retailers lifted prices rationally alongside supplier price increases, and didn’t add extra margin as has been the case in the past.”
Morgan Stanley said supermarket trading was “benign”, noting competition has fallen over the past two years. That trend appeared to have continued in December as Coles started life as a newly listed company on the stock exchange, the bank said.
Still, Morgan Stanley said the ability of supermarket giants to fatten their profit margins would be constrained by digital investments.