The Woolworths Group Ltd (ASX: WOW) share price is down even though it reported growth in the first three months of FY24.
Woolworths Group share price
FY24 Q1 sales update
In the first three months of FY24, total sales increased 5.3% to $17.2 billion.
Australian supermarket sales increased 6.4% to $13.1 billion, Australian business-to-business sales rose 1.5% to $1.1 billion, New Zealand food sales rose 2.8% in NZ terms to NZ$2.06 billion and Big W sales fell 5.5% to $1.1 billion.
Breakdown of headline figures
Interestingly, Woolworths food e-commerce sales rose 18.4% to $1.56 billion, with COVID-19 no longer having a major positive or negative impact on the growth or comparable period.
In terms of inflation, the change in average prices, excluding tobacco and fruit and veg, for Woolworths food was 4%. Including fruit and veg but excluding tobacco, inflation was 1.8% – in other words, fruit and veg prices fell during the period.
Woolworths said that higher item growth – selling more items – offset the moderating inflation for its supermarkets. Slowing inflation could have an interesting effect on the Woolworths share price in the coming months.
During the quarter, 15 Woolworths supermarket renewals were completed, a net five new stores were opened and nine small supermarkets were converted to Metro Food stores.
Excluding the exited international businesses in its B2B segment, sales would have increased 6.2%, with PFD growing sales by 9.3%.
BIG W saw a “modest improvement” in the second part of the quarter, though customers are “trading down” within categories. Profitability is being hurt by lower sales and higher wage costs.
Trading update
Woolworths revealed that sales trends in October to date had remained “broadly in line” with the trend lines in the first quarter, the trading environment “remains uncertain and value for money remains a key focus” for customers.
Final thoughts on the Woolworths share price
Woolworths has impressed over the last four years with good sales growth, an impressive logistics supply network and an ongoing diversification of the business through acquisitions.
The Woolworths share price is close to a 6-month low, so this could be an interesting time to look at the company. However, there are other companies that I believe may offer stronger profit and dividend growth in the coming years.