UPDATE 1-Australia's Woolworths chasing acquisitions

(Adds executive comment, details)

SYDNEY, Nov 16 (Reuters) - Woolworths Ltd (WOW.AX: Quote, Profile, Research, Stock Buzz), Australia's largest supermarket chain, said on Friday it is in a strong position to buy other businesses, but if it does not make a big acquisition it will consider returning capital to shareholders in 2008.

The company also reaffirmed that it expects profit in fiscal 2008 to rise by between 19-23 percent over the previous year on sales growth of 7-10 percent.

"Moving forwards, we remain active and vigilant observers of a wide range of potential acquisition opportunities both in Australia and overseas," Chairman James Strong told shareholders at the group's annual meeting.

Woolworths has gained market share and boosted profits in its core supermarkets business at the expense of rival Coles Group Ltd, but will face tougher competition after Coles was bought by conglomerate Wesfarmers Ltd (WES.AX: Quote, Profile, Research, Stock Buzz) in the country's largest takeover.

Woolworths made an offer for Coles' general merchandise businesses but withdrew it, and is appealing a New Zealand ruling that stopped it from making a takeover offer for New Zealand's general merchanise chain The Warehouse Ltd (WHS.NZ: Quote, Profile, Research, Stock Buzz).

Woolworths shares eased 0.7 percent to A$32.12 in line with the broader market.

($1=A$1.13)