Woolworths : First Quarter Sales Results

First Quarter Sales Results

Financial Year 2021 - 14 weeks to 4 October 2020

4 November 2020

Strong trading momentum continues in Q1,

focus now on COVIDSafe Christmas

	Group sales				Group eCommerce				September Group
					sales				VOC NPS
	$17.9BN				$1.5BN				55
	▲ 12.3% vs. Q1'20				▲ 86.7% vs. Q1'20				▲ +1 pt vs. Sept 2019

"It has been a pleasing start to F21 with all retail businesses delivering strong sales growth and customer metrics remaining solid. COVID costs remain material as we continue to prioritise the safety of our customers and team but have moderated as we become more efficient at operating COVIDSafe. During the quarter, 22 BIG W stores were closed to in-store customers and 85 ALH venues were closed in Victoria. BIG W stores reopened on 28 October and ALH venues will reopen on 9 November.

"Australian Food total sales increased by 12.9% in Q1 as customers consumed more at home, demand for eCommerce services showed no sign of slowing and the team delivered a successful Disney+ Ooshies program. New Zealand Food sales growth moderated over the quarter due to easing COVID restrictions and lower market growth rates with total sales growth of 6.9% in Q1. BIG W's total sales increased by 20.4% with Leisure and Toys a standout. Within Endeavour Group, Endeavour Drinks' sales remained very strong (+21.4%) through the quarter with Dan Murphy's and eCommerce sales the highlights. Hotel trading continued to be impacted by the closures in Victoria with total sales declining by 33.2%.

"We continued to support our communities and team during the quarter. This included participating in food appeals on both sides of the Tasman and supporting residents during the Melbourne towers lockdown in Victoria. Mental health and team wellbeing remain a priority and we provided our team with additional leave entitlements, to encourage them to take a break, and extended team discounts. I wanted to specifically acknowledge our Victorian customers and team for their resilience and efforts to slow the spread of COVID.

"In October, Australian Food comparable sales growth was in the high single-digits, moderating over the month. Growth in New Zealand also slowed relative to Q1. Endeavour Drinks and BIG W have continued to perform strongly. Despite the Victorian closures, Hotels was profitable in Q1 but materially down on last year. For the rest of the calendar year, we expect elevated sales and costs to continue as customers spend more time at home, continue to embrace eCommerce and we ensure our stores and DCs remain COVIDSafe.

"Christmas is only 50 days away and it will be very different to previous years; however, we have worked hard as a team to ensure that all Woolworths Group businesses provide our customers with the opportunity to celebrate the spirit of Christmas in an enjoyable, affordable and COVIDSafe way."

Brad Banducci

CEO, Woolworths Group

First quarter sales

	2021	2020		COMPARABLE
$ MILLION	(14 WEEKS)	(14 WEEKS)	CHANGE	GROWTH
Australian Food	12,033	10,663	12.9%	11.5%
New Zealand Food (AUD)	1,738	1,660	4.7%
New Zealand Food (NZD)	1,877	1,756	6.9%	5.8%
BIG W	1,115	926	20.4%	22.3%
Endeavour Drinks	2,654	2,186	21.4%	20.0%
Hotels	313	468	(33.2)%	n.m.
Endeavour Group	2,967	2,654	11.8%	n.m.
Total first quarter sales for the Group	17,853	15,903	12.3%

Woolworths Group Limited ABN 88 000 014 675	1

Australian Food

Sales performance by channel

	Q1'21	Q1'20
$ MILLION	(14 WEEKS)	(14 WEEKS)	CHANGE
Woolworths Supermarkets (stores)1	10,637	9,745	9.2%
Woolworths eCommerce	961	480	100.0%
Woolworths Supermarkets	11,598	10,225	13.4%
Metro Food Stores	235	248	(5.1)%
Adjacency revenue2	200	190	5.8%
Total Australian Food sales	12,033	10,663	12.9%

Operating metrics

	Q1'21	Q1'20
	(14 WEEKS)	(14 WEEKS)
Customer metrics
VOC NPS (Store and Online)	50	49
Store-controllable VOC	80%	80%
Sales metrics
Total sales ($ million)	12,033	10,663
Total sales growth	12.9%	7.8%
Comparable sales growth	11.5%	6.6%
Two-year average comparable sales growth	9.1%	4.2%
Volume productivity metrics3
Comparable transaction growth	(9.3)%	2.8%
Comparable items per basket growth	15.8%	1.9%
Comparable item growth	5.0%	4.7%
Change in average prices
Total	1.2%	0.3%
Total excluding Tobacco	(0.2)%	(1.2%)

Australian Food's VOC NPS (Store and Online) increased one point compared to the prior year to 50, however declined three points compared to Q4'20. Store-controllable VOC of 80%, was in line with the prior year and declined two points compared to Q4'20 with Ease of Pick up and Queue Wait Time impacted by the sustained higher trading volumes as a result of COVID.

Total Australian Food sales for the quarter (including eCommerce) increased 12.9% to $12.0 billion with comparable sales increasing 11.5% (11.5% excluding Tobacco). eCommerce sales increased 100.0% to $961 million with sales penetration in the quarter reaching 8.0% (Q4'20: 6.3%). Sales continued to benefit from COVID-driven higher in-home consumption as well as the success of Disney+ Ooshies. Sales growth in Victoria was approximately 20% in the quarter due to the more stringent restrictions in place. Excluding Victoria, Australian Food total sales increased by 10.6%.

Freestanding and neighbourhood stores continue to outperform with sales growth in major shopping malls and city locations still impacted by customer preferences to shop locally. As the quarter progressed, there was some reversion in this trend. Long Life and Fresh both experienced strong sales growth and Tobacco sales were higher than recent trends with increased demand from the closure of tobacconists in Victoria due to COVID restrictions.

Q1'21 comparable transactions declined 9.3% as customers continue to shop less frequently but purchase larger baskets with comparable items per basket growth of 15.8%. The increase in eCommerce penetration also contributed to the growth in items per basket with the trend amplified in Victoria.

Metro Food Stores sales declined 5.1% to $235 million, materially impacted by reduced foot traffic across CBD areas and transport hubs, particularly in Victoria. On-The-Go store comparable sales declined by approximately 50%, partly offset by growth in Neighbourhood stores.

Average prices for Q1'21 increased 1.2%, which was lower than Q4'20 (+2.4%) despite higher demand and unfavourable growing conditions leading to higher market prices in some vegetable categories. Excluding Tobacco, average prices declined 0.2% with more normal levels of promotional activity and lower inflation in Grocery Food, Freezer, Health, Beauty and Baby and Household and Pet.

During the quarter, six net new stores (five Supermarkets and one Metro) were opened. Separately, five Supermarkets were temporarily converted to fulfil online demand in Victoria and five Metros temporarily ceased trading. Eleven renewals were completed. At the end of the quarter, there were 992 Supermarkets and 65 Metro Food Stores, with a total fleet size of 1,057 stores.

Support for communities continued during the quarter including the nationwide Annual Feed Appeal, Share the Dignity partnership and team members redeployed to provide fresh food and essential items to local communities impacted by the Melbourne towers lockdown in July.

1. Excludes eCommerce sales fulfilled from store
2. Adjacency revenue includes FinTech (Insurance and Payments), Exports, Summergate and Wholesale revenues
3. Volume productivity metrics are disclosed as percentages and therefore may not add

ABN 88 000 014 675

2

WooliesX

Digital & Media metrics

	Q1'21	Q1'20
	(14 WEEKS)	(14 WEEKS)
Average weekly traffic to digital assets* (million)	11.4	6.5
Average weekly traffic growth (year on year)	75.5%	96.3%
*Digital assets include Woolworths website and app, Everyday Rewards website and app, and Woolworths Insurance website

eCommerce metrics

	Q1'21	Q1'20
	(14 WEEKS)	(14 WEEKS)
Customer metrics
Online VOC NPS	58	60
eCommerce sales metrics
eCommerce sales ($ million)*	961	480
eCommerce sales growth	100.0%	43.2%
eCommerce penetration	8.0%	4.5%
Pick up mix (% of eCommerce sales)	32.1%	35.3%
*WooliesX sales numbers are included in Australian Food total and comparable sales

Everyday Rewards metrics

	Q1'21	Q1'20
	(14 WEEKS)	(14 WEEKS)
Total Everyday Rewards members (million)	12.6	11.9
Scan rates* (%)	50.1	46.8

*Scan rates for Woolworths Supermarkets

Improving the digital experience for customers was a key focus during the quarter as average weekly traffic to Woolworths' websites and apps continued to increase in Q1 with 11.4 million visits, up 75.5% on Q1 F20 and 12.7% on Q4 F20. App traffic growth has been particularly strong following the launch of the Everyday Rewards app in May 2020 with downloads now exceeding 2.3 million. Active users and downloads also continue to grow strongly for the Woolworths app supported by smart shopping lists, meal inspiration and enhancements to allow customers to easily activate personalised specials. Customers also continue to use Woolworths' digital platforms to view catalogues, specials, store trading hours and delivery slots.

Online (eCom) VOC NPS of 58, measured using the final month of the quarter, was down two points on last year and was impacted by spikes in demand (particularly in Victoria), product availability and some customer disappointment about Ooshies running out earlier than expected. The team continues to focus on improving the customer experience, delivering efficiencies, and capacity management through the peak Christmas period.

eCommerce sales growth further accelerated in the quarter, increasing by 100% on Q1'20 and materially exceeding Q4'20 growth of 69%. By state, Victorian growth was strongest with COVID restrictions resulting in growth of over 180% for the quarter. Sales in NSW and ACT were also strong with growth slightly lower in SA, WA and QLD. Online penetration in Q1 was 8.0% of sales, up 3.5 pts on the prior year.

eCommerce sales growth was assisted by network capacity increases following a doubling of Home Delivery slots in Q4'20 and further increases in capacity in Q1 with another 44 Home Delivery stores and 92 contactless Drives rolled out. At the end of quarter, Drive was available in 412 stores and Delivery Now had been extended to 111 stores.

Everyday Rewards members increased to 12.6 million members at the end of Q1, assisted by the launch of a new partnership with Bupa in Q4'20 and a customer brand refresh. Scan rates also increased with over half of customer transactions including a scan of a Rewards card. Scan & Go was expanded to 19 locations across Supermarkets and Metro enabling contactless check-out for customers, and has now been integrated into the Woolworths app.

ABN 88 000 014 675

3

New Zealand Food1

Operating metrics

	Q1'21	Q1'20
	(14 WEEKS)	(14 WEEKS)
Customer metrics
VOC NPS (Store and Online)	48	45
Store-controllable VOC	83%	81%
Sales metrics1
Total sales ($ million)	1,877	1,756
Total sales growth	6.9%	4.6%
Comparable sales growth	5.8%	4.8%
Two-year average comparable sales growth	5.3%	4.4%
Volume productivity metrics2
Comparable transaction growth	(12.5)%	3.0%
Comparable items per basket growth	13.6%	1.8%
Comparable item growth	(0.6)%	4.8%
Change in average prices
Total	0.8%	0.5%
Total excluding Tobacco	0.6%	0.5%

CountdownX

	Q1'21	Q1'20
	(14 WEEKS)	(14 WEEKS)
Customer metrics
Online VOC NPS	67	65
eCommerce sales metrics1
eCommerce sales ($ million)	224	149
eCommerce sales growth	50.5%	38.4%
eCommerce penetration	11.9%	8.5%
Loyalty
Countdown Onecard members (million)	1.8	2.0
Onecard scan rates (%)	59.1	59.7

New Zealand Food's customer metrics improved on the prior year and Q4'20. VOC NPS of 48, was up three points on the prior year and one point on Q4'20. Store-controllable VOC achieved a new high of 83%, up two points on the prior year and one point on Q4'20. Ease of Pick Up and Cared About My Needs VOC have increased materially on the prior year with customers recognising the measures taken by the business during COVID to improve convenience and safety.

Total sales increased by 6.9% to $1,877 million with growth moderating over the quarter due to reduced restrictions, cycling the Disney Words collectables program in the prior year and lower inflation. There was a short-lived sales increase in August following new COVID cases being detected; however, growth quickly returned to trend. In September, Countdown's SuperInsects educational program delivered strong customer engagement.

Comparable sales growth was driven by items per basket growth with COVID-related customer behaviours including less frequent visits, bigger baskets, a preference for online and local shopping, also benefitting New Zealand Food's FreshChoice and SuperValue franchise stores.

eCommerce sales growth was 50.5% in Q1 with penetration for the quarter at 11.9% of sales, in line with Q4'20. During the quarter, Countdown launched a third dedicated eCommerce fulfilment centre in Wellington and introduced in-app eCommerce shopping functionality, with October seeing the relaunch of a simplified and strengthened Onecard food rewards proposition. Onecard member numbers were lower than the prior year due to the consolidation of shopping trips among family members.

Average price growth was below recent periods in Q1 at 0.8% compared to 2.3% in Q4'20 with lower inflation predominantly driven by Long Life categories. At the end of the quarter there were over 4,000 products on the Great Price program as Countdown continued to focus on affordability for customers. Average selling prices continue to be impacted by basket mix due to larger pack sizes.

As part of Countdown's commitment to support team members and local communities, the business ran its first Winter Appeal under the Food for Good platform, focused on the team member wellness for Mental Health Awareness week, and made changes to the way it communicates in celebration of Te Wiki o te Reo Māori (Māori language week).

During the quarter, no new Countdown stores were opened with 181 stores and three eStores at the end of the quarter.

1. Total sales and growth for New Zealand Food is quoted in New Zealand dollars
2. Volume productivity metrics are disclosed as percentages and therefore may not add

ABN 88 000 014 675

4