In early trade the Woolworths Limited (ASX: WOW) share price is up almost 1.5% to $25.63 following the release of a sales update from the retail giant.
Here are key takeaways from today's first-quarter sales update:
- Australian Food sales rose 4.7% on the prior corresponding period to $9,634 million. Comparable sales growth of 4.9%.
- New Zealand Food sales rose 0.4% to (A)$1,508 million. Comparable sales grew 2.7% in local currency.
- Endeavour Drinks sales increased 3.8% to $2,047 million. Comparable sales growth of 3.3%.
- BIG W sales increased 2.5% to $890 million. Comparable sales growth was 2.9%.
- Hotels sales grew 4.1% to $441 million. Comparable sales also up 4.1%.
- Sales from the discontinued petrol operation increased 4.6% to $1,226 million.
- Total first-quarter sales from continuing operations increased 3.7% to $14,520 million.
Overall I felt that this was a strong performance from Woolworths' and a much better showing than rival Wesfarmers Ltd (ASX: WES) which released its first-quarter update last week.
Perhaps the most impressive aspect of this quarter was that Australian Food sales grew 4.7% despite being faced with a material increase in food deflation. By comparison, Wesfarmers' Food and Liquor business reported growth of just 1.5% to $7,968 million last week.
Pleasingly, Woolworths reported double-digit online sales growth in both Australian and New Zealand Food. Management pointed to rollout of its pick-up service to all Woolworths and Countdown supermarkets as a key driver of this growth.
Should you invest?
While I am very impressed with Woolworths' performance during the first-quarter, it is important to note that these are just sales figures and don't reflect any changes in profit margins that might be occurring.
Because of this I would suggest that investors keep their powder dry until it provides an update on its performance year-to-date at its annual general meeting on November 23.
