By Mike Cherney


SYDNEY--Australian grocer Woolworths Group Ltd. said overall group sales increased in its fiscal first quarter, but key supermarket sales declined.

In the 14 weeks to Oct. 2, Woolworths said total group sales were 16.36 billion Australian dollars (US$10.4 billion), a rise of 1.8% compared to the prior year. But sales in its Australian supermarkets, its largest unit by far, fell by 0.5% to A$12.2 billion. In local currency, New Zealand grocery sales fell by 2.5%.

Woolworths said the grocery sales dip reflected the cycling of Covid-related lockdowns in the prior year, when consumers were stuck at home and couldn't eat out. The rise in group sales was driven in part by discount department store Big W, which had a 30% increase to A$1.2 billion as customers returned to in-store shopping following last year's lockdowns. Australian business-to-business sales also rose by 26% to about A$1.2 billion.

Looking ahead, Woolworths said ongoing supply chain issues and a possible wet summer could be challenges.

Still, there are already indications of improvement, Woolworths said. In October, on-year sales growth trends in Australian food had improved, given that lockdowns ended around that time last year. It added there are signs of stabilization in the New Zealand food market.

Woolworths said inflation continued to accelerate in the fiscal first quarter, with average Australian grocery prices rising 7.3% on year. It said there are signs of customer purchasing habits changing, but it remains unclear if that's due to inflation or post-Covid normalization.

"There are 51 days until Christmas and we are very focused on delivering a much-needed inspirational and affordable festive season for our customers," Chief Executive Brad Banducci said.


Write to Mike Cherney at mike.cherney@wsj.com


Corrections & Amplifications

This article was corrected at 0028 GMT to reflect that Woolworths Group Ltd. said it expects second-half earnings in its New Zealand food unit to be higher than the prior two halves, though there is uncertainty on the trajectory of improvement. The original version incorrectly implied that the expectation was for the broader business.


(END) Dow Jones Newswires

11-02-22 1806ET