Poor petrol sales hinders Woolworths’ first quarter results

Petrol sales for the quarter of $1.3 billion were impacted by changes to the Woolworths-Caltex alliance and a 10.6 per cent reduction in average fuel sell prices.

Sales from Caltex-operated sites are no longer recognised by Woolworths, which says petrol sales in the second quarter will continue to be impacted by changes to the alliance until it cycles the final transition of the stores in December.

Comparable sales (dollars) decreased 12.2 per cent and comparable volumes decreased 2.3 per cent. Premium fuels and diesel continued to show strong growth offset by lower grade fuels and LPG.

Merchandise sales remained strong with growth of 10.0 per cent for the quarter. Comparable merchandise sales increased 7.2 per cent, driven by strong in-store promotions and seasonal product.

Woolworths opened one petrol canopy during the quarter, bringing the total to 517.

Woolworths’ Australian food and liquor sales for the quarter were $11.1 billion, an increase of 0.4 per cent on the previous year. Overall, Woolworths Ltd sales for the quarter were $15.7 billion.

Woolworths Ltd CEO Grant O’Brien said he is pleased with the positive steps taken to transform the business, as Woolworths accelerates the pace of its change program across all of its businesses.

“At our FY15 results announcement in August, we advised that FY16 would bear the impact of our significant investment in price, service and customer experience resulting in lower margins in Australian supermarkets,” he said. “Since then, we have chosen to accelerate this investment while also absorbing significant cost inflation in categories like meat and relaunching our Woolworths Rewards loyalty program.

“We are encouraged that our investment is being recognised by customers with a consistent improvement in key customer metrics like ‘Net Promoter Score’ since the beginning of the year.”

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