Woolworths to Reveal Second Quarter Sales Figures

Australia based retail group Woolworths (WOW) is expected to come up with solid indication today regarding how the retail sector was priced during the Christmas trading period when the company will present its second quarter sales figures. Analysts are assuming that the retailer might report a 6.5 percent sales growth apart from petrol, towards the lower end of the forecasts of the company sales growth within the range of 5 and 9 percent in the current financial year. The sale of petrol does not reflect directly on earnings performance as it is mainly influenced by the instability in the wholesale fuel prices instead of the quantity of sales, which is the reason why it is not included in the forecasts.

According to Grant Saligari, the analysts of Credit Suisse, Woolworths is likely to post a solid performance as far as its Australian supermarkets operations is taken under consideration, something that includes the Big W general merchandise chain and the consumer electronics unit. JPMorgan analyst Shaun Cousins is expecting the food and liquor division of the company to post a 4.3 percent sales growth during the second quarter excluding the advantage of the new-store openings. This would mark a decline for a second consecutive quarter following the first quarter where the company reported a 6 percent sales growth on a same-stores basis where the growth was recorded as 8.8 percent during the fourth quarter of the previous financial year. It is to be mentioned that the food and liquor division generates around two-third of the sales revenue for Woolworths.

The declining sales growth could be partially resulted by the lower food price inflation, something according to JPMorgan may slide down to 1.9 per cent during the second quarter. The New Zealand based supermarkets operation is likely to post a slow growth in line with a general decline in the supermarket sector of that country. Woolworths acquired the New Zealand supermarket business in 2005 in exchange of $2.6 billion when WA-based Foodland broke up.