WOW - Stock Update
Company Overview
Woolworths Group released their 3Q22 sales results earlier this week. WOW reported an Australian Q3 comparative sales growth of +4.4% which was an acceleration from the +1.9% reported in 2Q22 and is slightly ahead of what Coles reported last week (+3.9%).
WOW is also tracking better than Coles in terms of COVID related costs (as a percentage of sales) for the quarter. Food inflation was reported at 2.7% for Woolworths and 3.3% for Coles.
Woolworths hosted a teleconference where they mentioned that overall sales trends are steady, supply chain issues are easing, and more price inflation is expected to come. Notably, there was also mention of eCommerce growth rate of 38% and Big W average ecommerce basket size increases.
The solid result in Australian sales was offset by a one-off hit to the NZ food business related to COVID costs as well as Big W sales growth underperformance. BIG W comparable sales and total sales were both reported down 3.4%. This supports our HOLD rating.
For more information, please see Woolworths 3Q22 Sales report announcement
Company Overview
Woolworths Group (WOW) is Australia’s largest supermarket operator with 1070+ sites nationwide as well as 180+ sites in New Zealand.
An increase in comparative sales growth was reported by WOW, however, the lowered Big W sales performance, Covid-19 related costs and greater economic pressures reinforce our investment thesis of a HOLD rating.
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