Why Woolworths’ (ASX:WOW) shares are on the rise today?

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 Why Woolworths’ (ASX:WOW) shares are on the rise today?
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Highlights

  • Woolworths’ shares were trading in the green, up 0.171% as of 3:11 PM AEDT today (28 November).
  • The group released its Q1 FY23 results earlier this month.
  • In Q1, Woolworths’ group sales reached 1.8% higher than the corresponding period last year.

Shares of Australian trans-Tasman retailing company Woolworths Group Limited (ASX:WOW) were heading north despite there being no price-sensitive update from the company. One share of Woolworths was valued at AU$35.140 on the ASX with a gain of 0.171% as of 3:11 PM AEDT, 28 November 2022.

Today’s positive performance of Woolworths’ shares was in line with the benchmark S&P/ASX 200 Consumer Staples sector. INDEXASX:XDJ saw an increase of 15.7 points, totalling 12,922 points around the same time.

Meanwhile, in the last five trading sessions, Woolworths’ shares have gained 0.14%, and in a month, the share price of Woolworths has increased by 6.45%. On the contrary, the value of one Woolworths share has shed 8.63% on a year-to-date (YTD) basis and 12.34% over a year at the time of writing.

A glance at Woolworths’ Q1 FY23 update

On 3 November 2022, Woolworths Group Limited published its Q1 FY23 sales results on the ASX. The group sales for the quarter ended 2 October 2022 were AU$16,363 million, 1.8% higher than the previous comparable period (pcp). However, eCommerce sales during Q1 FY23 decreased by 14.5%, totalling AU$1,607 million for the quarter.

Commenting on the Q1 FY23 results, Brad Banducci, CEO of Woolworths Group, said:

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Data Source: Company announcement dated 3 November 2022

Let’s look at how different divisions performed during Q1 FY23 for Woolworths:

Food sales: According to the ASX report, food sales at Woolworths during Q1 FY23 were less than the pcp due to the effects of the COVID-19 pandemic. In Australia, food sales were 0.5% lower. In New Zealand, food sales were 2.5% lower than in Q1 FY22. However, on a three-year compound annual growth rate basis (CAGR), Australian food sales were up 5.3%, and New Zealand food sales were 4.7% higher.

eCommerce food sales: Australian eCommerce food sales for Q1 FY23 decreased by 10.8% compared to Q1 FY22; BIG W sales were also 51.8% lower than the pcp. Additionally, on a three-year CAGR, Australian eCommerce and BIG W saw positive sales growth, up 43.5% and 43.7%, respectively. For the New Zealand eCommerce segment, sales grew by 5.9% compared to the pcp.

B2B sales: During Q1 FY23, Australian B2B sales jumped by 26%, and BIG W sales increased by 30.1% compared to the pcp.

Woolworths stated that these mixed Q1 FY23 sales results were driven by two factors: i) COVID-19 impacts and ii) rising inflation. Compared to the pcp, inflation accelerated in Q1 FY23, with average food costs in Australia rising by 7.3% and in New Zealand by 5.3%.

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