(Reuters) – Australia’s Woolworths Group said on Tuesday its domestic supermarkets and discount department stores were experiencing strong trading momentum in the current quarter, but flagged stocking issues due to supply chain disruptions.
The company posted a near 10% jump in its third-quarter sales at A$15.12 billion ($10.66 billion) on a continuing operations basis, as it benefited from consumer stockpiling in the early part of the quarter, with online sales rising more than 33%.
Woolworths faced COVID-19 related labour shortages and supply chain disruptions due to floods during the quarter. While it said there has been more stability across the group in recent weeks, lower-than-normal stock levels in its stores and broader inflation leave it at risk of bearing the brunt of rising costs.
Average prices at its biggest segment Australian Food – whose sales rose 5.4% to A$11.43 billion in the quarter – went up by 2.7% excluding tobacco, driving up shelf prices but putting pressure on the company’s margins.
Last week, smaller rival Coles Group said it hoped improved stock availability would curtail racing inflation, but warned soaring supply costs would trouble the economy for another year.
Inflation in Australia surged at the fastest annual pace in two decades last quarter as petrol, home building and food costs climbed, in tandem with rising costs across the world, which is resulting in higher input costs for businesses.
Comparable sales for Woolworths’ Australian Food division were up 4.4% during the quarter. Coles’ Supermarkets segment also reported similar comparable growth at 3.9%.
In New Zealand, Woolworths’ supermarket chain Countdown – which brought in about 11.5% of third-quarter sales – was expected to take a hit of between NZ$120 million ($77.15 million) and NZ$140 million to its second-half operating earnings owing to COVID-related costs.
($1 = 1.4186 Australian dollars)
($1 = 1.5555 New Zealand dollars)
(Reporting by Sameer Manekar and Harshita Swaminathan in Bengaluru; Editing by Shailesh Kuber)