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Deflation of fresh produce masks volume growth from Woolies and Coles

Deflation of fresh produce masks volume growth from Woolies and Coles

The Woolworths Food and Liquor Division reported 3.8% sales growth to $37.5 billion for the year to June 2012.  Same store sales growth increased by 1.3% for the year.  For the June Quarter, sales growth was 3.8%, year on year, while same stores sales grew by 1.3%.

In comparison, Coles reported sales growth of 6.1% to $33.7b and same store sales growth of 3.7%.  For the June Quarter, sales growth was 4.6%, year on year, while same store sales grew by 3.0%.

Both organisations reported price deflation of approximately 4% in fresh produce, and this masked both their strong volume growth and the increasing consolidation of the Australian supermarket industry.

The Montgomery (Private) Fund is a shareholder in Woolworths, and likes its 26% average return on equity.

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Roger is the Founder and Chairman of Montgomery Investment Management. Roger has over three decades of experience in funds management and related activities, including equities analysis, equity and derivatives strategy, trading and stockbroking. Prior to establishing Montgomery, Roger held positions at Ord Minnett Jardine Fleming, BT (Australia) Limited and Merrill Lynch.

This post was contributed by a representative of Montgomery Investment Management Pty Limited (AFSL No. 354564). The principal purpose of this post is to provide factual information and not provide financial product advice. Additionally, the information provided is not intended to provide any recommendation or opinion about any financial product. Any commentary and statements of opinion however may contain general advice only that is prepared without taking into account your personal objectives, financial circumstances or needs. Because of this, before acting on any of the information provided, you should always consider its appropriateness in light of your personal objectives, financial circumstances and needs and should consider seeking independent advice from a financial advisor if necessary before making any decisions. This post specifically excludes personal advice.

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