The Woolworths Group Ltd (ASX: WOW) share price rose 2% in early reaction after the supermarket business announced its quarterly sales update.
FY25 third quarter update
The supermarket company reported that group sales increased by 3.2% to $17.3 billion for the 13 weeks to 6 April 2025.
Within that total, Australian food sales grew 3.6% to $13 billion, business to business (B2B) sales rose 6.3% to $1.4 billion, New Zealand food sales increased 1.8% to $1.9 billion (or up 4.8% in New Zealand dollar terms) and W Living sales fell 2.7% to $1.2 billion.
Impressively, group e-commerce sales increased by 15.7% to $2.2 billion.
Woolworths reported that at its supermarkets, the total change in average prices (inflation) was 0%. Excluding tobacco, there was a 0.5% decline of average prices.
The company said that fresh item growth improved due to lower prices in the chilled section and strong item growth in meat, with customers trading into more value-driven lines such as mince.
Own brand and exclusive brand sales continued to outperform in the quarter, with growth of 5.7% of long life own brand sales were particularly strong in value categories, with 8% growth. This could be essential for Woolworths shares in the coming years.
However, weather events added additional costs of between $20 million to $25 million due to higher stock loss, higher transportation costs and damage to the Hervey Bay supermarket.
The strong B2B sales were driven by strong growth in PFD, which saw double-digit fast food growth. Outside of PFD, meat export growth was also strong, reflecting a “strong international beet market.”
Within W Living, BIG W sales fell 1.5% to $986 million and Petstock sales declined 9.7% to $204 million. Woolworths said this reflected the timing of Easter and the divestment of 41 Petstock stores and 25 veterinary clinics were still owned in the prior year. BIG W’s Easter-adjusted sales rose 1.9%.
However, clothing remained a challenge, with the third quarter growth reliant on clearance pricing and a slower start to autumn/winter has continued into April. This has impacted BIG W’s profit outlook with the loss before interest and tax (EBIT, or LBIT perhaps) for the second half now expected to be approximately $70 million.
Final thoughts on the Woolworths share price
The business is doing what it needs to do to grow sales, which is a good sign for the longer-term. However, costs remain higher-than-desired at the company too.
While the Woolworths share price is down more than 10% from its former 52-week high, I’m not sure it’s one of the best buys on the ASX right now – some ASX growth shares have fallen further in the last couple of months and could make better buys today.
