New Woolworths boss keen to fix growth lag

Woolworths’ newly-appointed supermarket boss, Tjeerd Jegen, says the company hopes to reverse 10 consecutive quarters of slower sales growth than Coles.

Woolworths reported a better-than-expected increase in sales growth for the third quarter, but it is still the company’s slowest growth in two years.

For the 13 weeks to April 1, Woolworths posted a 3.9% lift in sales to $13.7 billion.

Chief executive officer Grant O’Brien says the growth figure is pleasing.

“I stated at the half-year that there were two key factors impacting the third-quarter sales outcome: cycling the natural disasters of 2011, and accelerating deflation,” O’Brien says.

Fruit and vegetables prices fell 20% for the quarter due to an oversupply.

“However we were pleased with continued growth in customer numbers, market share and units sold and the growing momentum of key initiatives,” he said.

The Australian supermarket giant remains cautious about its fourth-quarter outlook.

“Whilst the quarter saw an improving sales trend, we continue to remain cautious about the sales outlook for the fourth quarter, particularly given consumer and business uncertainty about the impact of the carbon tax and interest rates.”

Woolworths’ food and liquor division posted its lowest quarterly sales growth from comparable stores in 13 years.

The supermarket giant reported sales growth of just 1.1% in the second quarter of the financial year. Coles reported 3.7% growth in sales over the same period.

“It’s a very big concern – the universal measure of strength in retail is comparable sales growth, and it’s not good that we’ve had such a big gap between us and Coles,” Jegen said, according to The Australian.

“My personal agenda is growth, and we will do that by growing our fresh food offer and providing value to our customers.”

Woolworths (ASX: WOW) will release its third-quarter sales figures today. Coles releases its figures next week.

Woolworths and Coles (ASX: WES) are estimated to control about 79% of Australian supermarket sales, but budget competitor Aldi is planning to open 30 new stores this year.

Aldi, known for its big discounts, has complained that onerous planning laws have locked it out of certain suburbs across the east coast of Australia, making it difficult to break the Australian supermarket duopoly.