It’s earnings season once again, with many companies revealing their track record for the yearly sales and Q3 revenue.
Among the bigger companies, major supermarket chain Woolworths Group [ASX:WOW] provided its figures, posting a total of $16.34 million for the third quarter, which is an 8% increase in sales on the same time last year.
WOW was flat in mid-morning trade, sitting around $38.90 a share. In the year so far, the group has risen 16% in share price value, significantly exceeding rival Coles Group [ASX:COL]:
Source: TradingView
Woolworths’ third quarter shows solid sales
Woolworths addressed recovering supply chains and ongoing inflationary concerns, suggesting that while customers are proving to become more thoughtful about their spending, the answer is in value-centred, affordable options.
Australian food sales had increased by 7.6%, retail sales growth was 7.4% (a four-year compounded annual growth rate of 5.7%), and business-to-business sales also went up 16.4% with a 28% increase in PFD sales.
Food sales in New Zealand also gathered momentum, increasing 8.5% in the quarter. However, Woolworths flagged ongoing supply chain issues further impacted by Cyclone Gabrielle.
Big W sales grew 5.7%, yet growth rates moderated over the quarter with apparel sales experiencing a slow start to seasonal winter sales.
Overall, customer spending has remained fairly stable in the last quarter, proving the power of essential spending even during these unprecedented times.
Woolworths CEO Brad Banducci said:
‘Availability scores in our Food businesses are improving as supply chains slowly recover, but customers are concerned about the impact of ongoing inflation on household budgets.
‘In general, customer spending is stable. However, value-conscious customers are becoming more thoughtful about their discretionary spend, trading into more affordable options such as our own brands and looking for additional ways to save in store or through our Digital, Rewards and eCommerce platforms.’
WOW’s trade and the economic outlook
With inflation and rate hikes abounding over the past few months, many companies have been seeing a decline in earnings as customers watch their pockets.
Woolworths’ latest report showed some strength in the market and its own strategies, but it hasn’t been the same story for everyone.
It’s times like these when market critics await the insights needed to form opinions of the Australian economy.
And while companies continue unleashing their data, the bigger picture will soon become clearer.
What will Australian retail and consumer discretionary spending have to say about the state of consumer sentiment, and how much work will be needed to replenish that meter, if lacking?
And this is just one piece of the puzzle…
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Supermarket shelves are bare and random gaps are gaping in place of once readily available items.
Banks are permanently closing more and more branches across towns.
Used car prices are rising (prices in general are skyrocketing), and packaging is shrinking.
Is it all just inflation, COVID ramifications, and market volatility, or is there more to the story?
Mere ‘inconveniences’ may just be the start…
Geopolitical expert Jim Rickards has been making on-point predictions for decades.
And now he’s predicting ensuing financial chaos.
He explains it all in his book, SOLD OUT: How Broken Supply Chains, Surging Inflation, and Political Instability Will Sink the Global Economy.
You can grab a free copy when you sign up for The Daily Reckoning Australia right here.
Regards,
Mahlia Stewart
For The Daily Reckoning Australia
