Woolworths' slashing of grocery prices has failed to turn around the business.
The supermarket giant says it dropped food prices by 2.4 per cent during the third quarter after pouring more than $400 million into lower prices over the past nine months.
It plans to spend a further $150 million on lowering prices and raising customer service during the fourth quarter, but Woolworths' price cuts have so far failed to translate into more sales.
The retailer's comparable food and liquor sales, a key growth indicator, declined 0.9 per cent in the 13 weeks to April with total sales amounting to $10.7 billion.
It is the fourth consecutive quarter of declining like-for-like sales for Woolworths, while archrival Coles, the smaller of the two supermarket chains, continues to grow.
Coles last month reported an impressive 4.9 per cent jump in comparable food and liquor sales for the third quarter, with total sales climbing to $7.52 billion.
This shows Coles is blitzing its larger rival and continues to gain market share at the expense of Woolworths.
Analysts estimate Woolworths' share of the $88 billion supermarket sector to be about 40 per cent, while Coles has more than 30 per cent and Aldi about eight per cent, followed by the independents and Costco.
Woolworths' newly installed chief executive Brad Banducci rejected suggestions the group was losing customers and emphasised that it will take up to five years before significant price investment results in a turnaround.
"We have 27 million shoppers in our stores every week and the number of shoppers is growing, not declining," Mr Banducci said.
"It's not a question of shoppers in our stores but rather a question of us getting more of their basket of goods. That's the real challenge."
He said the focus in the quarter has been on targeting pasta, muffins, bread and other items that feature in a typical family's weekly meals.
"Spaghetti bolognese is one of the seven meals most families have every week," he said.
"Those are the kinds of (product) lines we looking to put on an everyday good price."
Meanwhile, Woolworths' failed home improvement arm, Masters, which it is gradually exiting, reported a 11.4 per cent increase in total sales to $507 million, unadjusted.
Its discount department store chain Big W continues to struggle, with the group expecting its general merchandise business to book a small loss in fiscal 2016 as it aggressively marks down excess stock.
Shares in Woolworths were steady in response to the results, rising two cents, or 0.09 per cent, to $22.27 at the close of trade.
BREAKDOWN OF THIRD QUARTER SALES:
*Total group revenue down 0.3pct to $14.9b
*Food & liquor sales down 0.9pct (adjusted)
*Petrol down 10.9 pct
*Big W & Ezibuy down 4.4pct
*Masters up 28.8pct
*Home Timber & Hardware down 3.8pct
*Hotels up 0.9pct
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