Countdown sales rise 2.1% in March quarter on rising prices, loyalty programme

ASX-listed Woolworths' New Zealand supermarket chain Countdown increased sales 2.1 percent in the March quarter as it benefited from rising prices and its tie-up with the AA Smartfuel loyalty scheme.

Sales rose to $1.59 billion in the 13 weeks ended April 2 from $1.56 billion a year earlier, the Sydney-based company said in a statement. Adjusting for Easter, sales were up 2.2 percent, and in Australian dollar terms rose 4.3 percent. Countdown's supermarkets food price index rose 0.8 percent in the period on more expensive dairy products and as fresh produce coincided with later Easter promotions.

Sales growth was driven by price, service and local product supply, as well as the Onecard loyalty programme and AA Smartfuel, launched in the second quarter, the company said.

Government data show New Zealand credit and debit card spending on consumables rose 4.7 percent to $21.69 billion in the year ended March 31, while grocery food prices rose 2.2 percent over the same period.

Woolworths opened two Countdown stores in New Zealand in the quarter, one of which was a reopening, and closed two more, ending the period with 183 shops. Two franchise stores were closed, leaving Woolworths with 63 franchised stores in New Zealand as at April 2.

The Australasian group's sales from continuing operations rose 3.7 percent to A$13.81 billion, led by a 5.1 percent gain in sales from its dominant Australian food business. The New Zealand clothing and homeware retailer EziBuy, which is up for sale, posted a 5.4 percent drop in sales to A$35 million. Woolworths' Australian petrol business, which it recently agreed to sell to Caltex Australia, posted a 14 percent gain in sales to A$1.23 billion.

Group chief executive Brad Banducci said the retailer's new strategy was still in its early stages and that the second half's results will "reflect the financial impact of higher investment in key areas, cost price increases (particularly in meat and produce) and our response to ongoing competition and promotional intensity."

The ASX-listed shares rose 1.5 percent to A$27.43, and have gained 12 percent so far this year, outpacing the 5.1 percent increase on the S&P/ASX 200 index over the same period.

(BusinessDesk)