Woolworths has put five years of underperformance behind it to score a tie with arch rival Coles in its March quarter sales.
Both supermarket giants delivered same-store growth in food and liquor sales of 3.5 per cent for the three months to March 31.
But the Woolworths’ result, unveiled on Wednesday, disappointed investors who had expected it to finally edge out Coles after five years of dragging behind its rival.
Woolworths’ total sales rose 5.3 per cent to $15.2 billion across its divisions as growth from its supermarkets, liquor stores, petrol stations and home improvement business offset a weak performance from Big W.
Morningstar analyst Tim Montague-Jones said both companies had performed well during the quarter, growing both sales and market share.
“Both Coles and Woolies are doing phenomenally well at the moment,” he said.
“I would say they are both level pegged.”
Mr Montague-Jones said Woolworths was recording its strongest growth in the fresh food section, which was coming at the expense of independent butchers and bakers and the like.
“They are very powerful businesses and if you are an independent retailer you don’t have a chance to compete on price.”
But the uplift in sales did not satisfy Woolworths investors.
Its shares dropped 72 cents, or 1.9 per cent, to $37.32.
Shares in Coles’ parent company Wesfarmers also continued to fall after the conglomerate failed to meet market expectations on sales growth a day earlier.
Wesfarmers shares closed 30 cents lower at $42.71.
But Woolworths boss Grant O’Brien insisted his company’s result showed the success of it strategy of boosting the performance of its food and liquor division.
“We have spoken consistently about our ambition to improve that business, quarter and quarter, and pleasingly that is evident again in these results,” he told reporters.
Mr O’Brien also said he does not expect consumers to spend less at Woolworths’ businesses following this year’s tough federal budget, which is expected to include spending cuts and tax hikes.
“I don’t see any great surprises and I don’t see any great change in consumer behaviour as a result.”
Big W sales fell 1.1 per cent during the quarter to $926 million, which Woolworths attributed to strong competition, lower prices and efforts to turn around the division.
Sales from the company’s home improvement division were up 29 per cent to $374 million thanks to the continued rollout of Masters stores and strong growth from Home Timber and Hardware.
Woolworths hotels business lifted sales 0.6 per cent to $357 million while sales from the company’s New Zealand supermarkets rose 16 per cent to $1.33 billion after gains in the New Zealand dollar offset weak trading conditions.