It was a mixed first half sales report from the country's dominant retailer, Woolworths Ltd.
The retailer said it lifted topline sales by 8.6% in the 27 weeks ended December 30 to $23.992 billion, from $22.092 billion in the previous corresponding half.
December quarter sales rose $1 billion to $12.3 billion in the three months ended December 30 from $11.3 billion a year earlier
That's impressive enough but there were faint signs of a slowing of momentum in the last three months of the year.
And yet, it slightly firmed its sales guidance for the year to a rise of between 8% to 10%, from the range of 7% to 10% given at the AGM in November.
But the market didn't like it, selling off the shares on a day when trading enthusiasm faded as the day went on. But WOW shares were weak in the stronger morning session.
So, by the close Woolies shares were down a sharp $1.30, or 4.22%, to $29.50. That took the year's fall to almost 14%, while the overall market is off 10.0% after yesterday's nasty 1.6% fall.
As to why the set against the retail giant: well it didn't make the forecasts from analysts which ranged from around 9% to just over 10% for the half. And there was a clear second half slow down compared to the first in the key supermarkets business and in the Big W chain.
"Our second quarter sales results reflect the continuation of the strong sales growth being experienced in all our divisions," Woolworths chief executive Michael Luscombe said in a statement.
"December trading was solid with the bulk of the Christmas trading occurring later than last year reflecting changing customer purchasing trends and the timing of Christmas Day."
The Australian food and liquor division sales for the half year were up 8.1% to $15.5 billion with December quarter were $7.8 billion, 7.4% higher than last year.
Woolies said comparable store sales in Food and Liquor for the second quarter increased 6% on the December quarter of 2006, with half year sales up by 6.8% on the December half.
That also concerned some analysts.
Woolies said food price inflation in the second quarter was approximately 2.4% "reflecting price pressures flowing through from drought-affected products, offset by deflation in produce". (Read fruit and vegetables, especially bananas, apples and tomatoes.)
BIG W sales grew by 13.1% during the half and 10.6% for the second quarter while comparable store sales in the second quarter were 3.6%, and 5.9% the half year.
That also worried investors and CEO Michael Luscombe referred to that performance in after release comments.
He claimed Big W had a 'fantastic' first week of 2008, but that's a case of so what. The first week of 2008 is outside the December half and Mr Luscombe was quick to point out that because Big W had such a strong first quarter, it would have been hard to expect that sales pace continue. Same store sales growth slowed from 9.6% in the first quarter to 3.9% in the December quarter.
And then he came clean, saying that the wet and cool December across much of Eastern Australia hurt sales after strong sales in October and November.
Six BIG W stores were opened during the half year taking total stores in the division to 148.
The company said at November's AGM that it was expecting earnings to grow by up to 23% this year and the company said an update would be given at the results release on February 26.
Here's how Woolies assessed its first half trading:
Australian Food and Liquor sales for the half year were $15.5 billion, an increase of 8.1%. Sales for the second quarter were $7.8 billion, an increase of 7.4% over last year. Comparable store sales in Food and Liquor for the second quarter increased 6.0% (1st quarter 7.6%, half year 6.8%) on last year as we cycle a similarly strong quarter in the prior year of 6.4%. Inflation in the second quarter was approximately 2.4%, slightly higher than last quarter, reflecting price pressures flowing through from drought affected products, offset by deflation in produce. Inflation for the half was 2.0%. (Last half year 4.0%) "The continuation of the growth evident in our comparable sales reflects the acceptance from our customers of our comprehensive offer, improved store execution and our on-going investment in lower prices. We were pleased with the Christmas trading period and the high standard of service delivered to our customers. Our focus on improving our offer continues with excellent progress being made in delivering our new store format throughout our network." said Naum Onikul, Director of Food Liquor & Petrol. There were 19 new supermarkets opened during the half year taking the total to 774. We also opened 13 new Dan Murphy stores taking the total to 80.
New Zealand Supermarkets achieved a sales result of $2.16 billion for the half year, with second quarter sales of $1.09 billion. New Zealand comparable sales for the second quarter were 5.7% (1st quarter 9.9%, half year 7.7%). This result is particularly pleasing and demonstrates the continued progress being made in improving our offer to the New Zealand customer. In New Zealand, overall food inflation was approximately 3.0% in the quarter. (1st quarter 2.4%, half year 2.7%, prior half year 1.1%)
Petrol sales for the half, including Woolworths/Caltex Alliance sites, increased by 6.4% to $2.7 billion. Petrol sales in the quarter increased 14.5%, reflecting higher petrol prices. Petrol comparable sales increased 3.7% during the half, (2nd quarter 11.6%). Comparable volumes increased 0.8% in the half. Volumes in the second quarter were impacted by lower demand due to higher petrol prices resulting in comparable volumes in the second quarter declining 1.3%. During the half year 12 petrol canopies were opened taking total sites to 516, including 135 alliance sites.
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