Xmas win for Woolies
WOOLWORTHS has beaten key rival Coles over the crucial Christmas trading period for the third year in a row, according to a new analysis.
Like-for-like sales at Woolworths are estimated to have increased at 3 per cent for the three months ending December, investment bank Morgan Stanley said in a note to clients.
Coles could only manage a 2 per cent rise, the note said.
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 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.
Consumers browsing online then transacting instore could explain why fewer people were initially entering stores, it said.
The latest retail update come ahead of the release of National Australia Bank’s cashless sales report for December, due out this month.
Morgan Stanley said total retail sales grew by 0.4 per cent in November — higher than what most analysts had expected but down on the previous 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 — 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, the investment bank said.
Morgan Stanley said supermarket trading conditions were “benign”, noting competition had 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.
Still, Morgan Stanley said the ability of supermarket giants to fatten their profit margins would be constrained by digital investments.
Coles’ profit margin on food sales is expected to come in at 4.02 per cent for the six months to December, down 3 basis points year on year, Morgan Stanley said.
Woolworths would book an earnings margin of 4.74 per cent, up 7 basis points compared with last year, it said.