WOW -4.15%: 3Q sales update from the supermarket giant was below expectations, and highlighted how strong a quarter Coles (COL) had who posted an update earlier this week seeing WOW shares to ~4 year lows. Food sales growth of just 1.1% on a like-for-like basis was around half that of expectations while inflation was negative (-0.2%) for the third quarter. The company pointed to aggressive promotions by competitors as part of the reason for the weakness, Coles running their Pokémon Builders campaign. Woolies noted an increase in home brand sales which would help margins, though an increase in promotional item sales is likely to offset. NZ (+1.5%) was also behind expectations for 3Q and while BigW beat despite a -4.9% drop for the quarter given it was cycling strong numbers. The outlook didn’t provide any relief either, saying food sales are improving but offset by inflation moderating while BigW has seen sales weakness continue into the last quarter. Woolies also expects $90-100m in additional supply chain costs in FY25 & FY26 before unwinding creating further pressure on earnings expectations.
MM is neutral WOW
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