Woolworths: Hard to Find the Silver Lining in a Tough Quarter

Woolworths' March quarter 2024 update reveals that, like competitor no-moat Coles, its customers are under pressure. Australian supermarket sales grew a modest 1.5% on the previous corresponding period, starkly underperforming 5% growth at Coles. We are reluctant to extrapolate the differential in sales growth of the two largest Australian supermarket chains over a relatively short time period. There are temporary factors for divergence in near-term sales momentum, including the timing of promotions and Coles' collectibles marketing.