UPDATE 1-Australia's Woolworths sales rise as online orders ahead of target

Wed Feb 5, 2014 7:30pm EST

* Woolworths Q1 sales up 6 percent

* Online sales above A$1 bln in calendar 2013

* Incremental growth in food and liquor (Updates with detail on food and liquor, outlook, shares)

SYDNEY, Feb 6 (Reuters) - Australia's largest supermarket chain Woolworths Ltd reported a 6 percent rise in first-half sales on Thursday, boosted by online orders and growth in its key food and liquor division.

Woolworths said online sales surged past A$1 billion ($891.75 million) for calendar 2013, a target that it had originally set for 2014. It said online orders jumped 40 percent in the first half but did not provide a full-year growth rate.

Growth in its key food and liquor division was 4.8 percent for the first half, compared with 4.7 percent a year ago.

Chief Executive Grant O'Brien said the result was a "positive reflection" on Woolworth's programme to reshape its business, which included extending its leadership in the food and liquor market.

Woolworths in August bought New Zealand-based direct retailer EziBuy Holdings Ltd to grab a larger share of Australia's rapidly growing online retail business. EziBuy makes 70 percent of its sales in Australia.

Group sales from continuing operations for the half-year ended Dec. 31 rose to A$31.84 billion including petrol, up from A$30.04 billion a year ago, the company said in a statement.

Shares in Woolworths were up 1.4 percent at A$34.39 in early trade, after dropping at the open, in line with the broader market. They have fallen from a peak of A$36.84 in April.

Woolworths and Wesfarmers Ltd-owned Coles, which together control 80 percent of Australia's supermarket sector, are expecting improved trading this year as consumer sentiment improves following a tough 2013.

Woolworths previously forecast profit to rise 4 percent to 7 percent in the current year. It provided no update on that forecast on Monday.

Analysts warn that Woolworths and Coles may record slower gains in market share and gross margin, even as the economy improves, as a result of regulatory changes following a price war on basic items such as milk and bread.

The pair in November agreed to a voluntary grocery code of conduct and to cap discounts on petrol, heading off potential legal action by the competition regulator.

($1 = 1.1214 Australian dollars) (Reporting by Jane Wardell; Editing by Richard Pullin and Stephen Coates)

Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.