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.