Woolworths has extended its lead on Coles - growing its sales at a healthy clip as the performance of its major rival lags behind.
The Woolworths group's like-for-like sales at Australian supermarkets rose 4.9 per cent to $9.63 billion in the 14 weeks to October, compared to a sluggish 0.4 per cent growth in comparable sales at Coles.
It is the fourth consecutive quarter in which Woolworths has outpaced Coles on sales growth.
Shares in Woolworths rose on the strong result, gaining 58 cents, or 2.3 per cent, to $25.88 - a near-two-month high.
Woolworths said sales growth was achieved despite sharply lower fruit and vegetables prices, including "major" price reductions for tomatoes, lettuce and berries due to favourable growing conditions.
The Wesfarmers-owned Coles last week cited the same deflationary pressures as a factor in its performance.
Woolworths chief executive Brad Banducci said the company's strong performance in the second half of the 2016/17 financial year had continued into the new year.
This included a solid increase in the number of items per shopping basket, which indicates Woolies is winning back family shoppers.
Mr Banducci said Woolworths lags Coles on price perception among consumers, despite being as competitively priced.
"Price perception has continued to improve but remains an opportunity," he said.
"We are not doing major investments (in lowering prices now) but normal course of business to get key prices on everyday items."
Since he took the helm 18 months ago, Woolworths has spent more than $1 billion to lower food prices and improve service, with around 3,800 products on consistently low prices.
The group's private label overhaul, which includes dumping Homebrand and Select for Essentials and Woolworths, is also nearly complete.
Comparable sales from Woolworths' Endeavour Drinks unit, which includes BWS and Dan Murphy's liquor stores, rose 3.3 per cent to $2.05 billion.
The group's hotels division, which includes poker machines, had a comparable sales lift of 4.1 per cent to $441 million with bar sales being the highlight thanks to sporting events and promotions.
And its struggling department store Big W posted sales of $890 million with a 2.9 per cent lift in comparable sales, driven by discounting products by an average 20 per cent.
Citi group analysts said Woolworths is its "preferred pick" in the Australian supermarket sector because it has sustained its strong food sales growth and because Big W was showing signs of improvement.
"Big W has shown early signs of positive traction with its repositioning, particularly after a strong period of price investment," the analysts said in a statement on Tuesday.
Share
