In his first public comments since his hostile Senate inquiry appearance, the Woolworths chief executive, Brad Banducci, has delivered worse-than-expected March quarter financial results and admitted the supermarket can “unequivocally improve”.
Sales across the group, which includes New Zealand and Big W stores, increased by 2.8% to $16.8bn in the quarter, while its Australian food sales were up 1.5% to $12.6bn. Average prices dropped 0.2%.
With the supermarket recording a modest rise in sales, customers were feeling the shock of material increases in mortgages, rent, utilities, insurance and other key household expenses this year, he told reporters on Thursday morning.
“It was a challenging quarter across the group with a noticeable shift in customer sentiment and shopping behaviours since Christmas,” he said.
Investors viewed the results poorly, sending Woolworths shares 4% lower in morning trading compared with a 0.3% increase for the overall market. Overall, the share price has lost about a fifth of its value since the beginning of the year.
In April, Banducci was threatened with imprisonment by the Greens senator Nick McKim at a fiery Senate inquiry hearing. He said on Thursday that Woolworths took the federal inquiry “very seriously”.
The inquiry was designed to investigate how big supermarkets set prices for shoppers and use their market power when dealing with suppliers. Together, Coles and Woolworths control two-thirds of the market.
“Reading all of the submissions, I took some very practical actions as to how Woolworths can deliver value to customers,” he said.
Clearly communicating unit prices was a key area that needed improvement, he said, as was focusing on providing price transparency to fruit and vegetable growers to enable them to make better decisions.
“The only way to approach it is constructively and there are clear learnings and areas that we can unequivocally improve,” he said.
Third-quarter sales figures showed that affluent customers were shopping more often and buying less in each shop, he said. For non-food based items – including household care and pet care – customers were more “promotionally sensitive” and were looking at rival retailers, including Bunnings and Kmart, when buying those “higher ticket price” items.
He said there was a trend towards dining in, and that while promotions were working well, they were “not a panacea for how we should deliver value to consumers”.
