In major news on Australian stocks, Woolworths Group Ltd. (AU:WOW) reported a 2.8% rise in its Q3 FY24 sales to AU$16.8 billion, which failed to impress investors. Moreover, the company warned about cautious consumer spending, despite a reduction in inflationary pressures. Woolworths’ stock fell over 4% as of writing.
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In comparison, Woolworths’ smaller rival, Coles Group (AU:COL), delivered 5.1% year-over-year growth in its supermarket division sales during Q3, indicating a narrowing gap between the two players. Coles’ total sales revenues grew by 3.4% in the third quarter.
Woolworths Group is a leading grocery chain in Australia and New Zealand, owning renowned brands like Woolworths, Big W, and Countdown.
Woolworths Faces Deflation Woes
Woolworths’ Australian food business, which is its biggest revenue generator, reported modest sales growth of 1.5%, reaching AU$12.58 billion. This performance reflected a tough comparison with the 7.6% growth in the third quarter of FY23 and a notable decrease in inflation, which was down 0.2% in Q3 FY24 compared to an increase of 5.8% in the third quarter of the prior Fiscal Year.
Woolworths’ Australian B2B business emerged as a standout performer, with reported sales growth of 3.2% compared to the same period last year.
The departing CEO, Brad Banducci, emphasized a significant shift in customer sentiment and spending behaviour since Christmas. Customers are increasingly seeking ways to save and cut back their expenditures after the holiday season. Moving forward, Woolworths expects these challenging conditions to continue for the next 12 months amid rising competition and a very low single-digit inflation range.
What is the Prediction for Woolworths’ Shares?
According to TipRanks’ consensus, WOW stock has garnered a Hold rating based on nine recommendations. The Woolworths share price prediction is AU$35.13, which is 15% above the current trading level.
