The company manufactures processed foods, exports and wholesales food and offers petrol retailing. WOW’s hotel operations include pubs, food, accommodation, and gaming.

1Q13 Sales

WOW’s 1Q13 sales continued to show an improving sales trend. Sales from continuing operations were $14.8 billion for the quarter, up 4.7% on the prior corresponding period.

The supermarket division (including liquor), which accounts for ~88% of sales, reported a 3.4% rise in sales to $12.99 billion.

Areas growth

While a majority of WOW’s 1Q13 sales were good without being great, there were a few standout divisions. Big W reported like-for-like (LFL) sales growth of 3.4%, showing the success of the group’s recent marketing campaigns.

The group’s newly entered Masters Home Improvement segment showed spectacular growth, with 62.2% increase in sales. Most of this was driven from seven new store openings in one quarter and greater brand recognition.

The company plans to open 150 stores over the next five years, with at least 30 stores to be opened by the end of FY13. We believe that exposure to this sector can only be beneficial to WOW’s earnings in the long run.

Looking forward

A real solid sales trend has begun to emerge for WOW and 1Q13 sales may continue this positive trend. Another fact we like about the group is that such a large proportion of its sales come from the more reliable supermarket division, as this provides more consistent earnings.

WOW’s ability to generate cash will become increasingly important to fund the Masters Home Improvement expansion and we believe this will be beneficial to WOW going forward.

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Woolworths (ASX:WOW) operates supermarkets, specialty and discount department stores, liquor and electronics stores throughout Australia.

ASX Blue chip supermarket giant Woolworths today announced 2Q sales growth of 5.1% to $14.1 billion compared to the previous corresponding quarter, this was in line with market expectations.

The 2Q sales results bought the 1H FY12 sales to $29.7 billion, a 5% increase on the previous year.

WOW also announced that it will sell its Dick Smith consumer electronics business following a strategic review that was announced in November.

Since the review the company said it has received a number of unsolicited approaches in relation to Dick Smith.

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Woolworths (WOW) is primarily an Australian and New Zealand supermarket company, and is widely considered among the market’s blue chip stocks.

WOW has branched our beyond its supermarket business and has built a massive empire which boasts an array of brand retailers and a heavy sprinkling of supermarkets throughout every major city in Australia.

On 18 April, WOW reported a 5.1% increase in third quarter sales from a year earlier.  The group also reaffirmed its full year guidance of 5% – 8% profit growth.

WOW said that sales were impacted by continued price deflation as well as the recent natural disasters.

The trading environment was likely to remain difficult due to a combination of lower consumer confidence, inflationary uncertainty, potential rate hikes and a stronger Australian dollar.

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WOW reported its FY10 sales numbers on 21 July, with sales increasing 4.2% from a year ago.

4Q10 Australian Food & Liquor sales rose 3.4%, with the result mainly impacted by food price deflation.

Quarterly sales at Big W and consumer electronics slumped 9.3% and 3.3%, respectively, with WOW attributing the drop to the cycling of fiscal stimulus and price deflation.

Overall, the results disappointed the market, with participants expecting better sales numbers from the group’s supermarket division.

WOW’s result meant it was one of the shares to sell on the day of the announcement, illustrated by an almost 2% fall in its stock price.

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