Countdown prices increase by 3.6% on a year ago

Tuesday, 3 May 2022

Grocery prices have increased an average 3.6% across Countdown stores over the last year, as suppliers increased prices, the supermarket chain says.

In the three months to March Countdown’s grocery prices rose an average 3.6% compared with the same period a year earlier, parent company Woolworths said in a statement to the ASX on Tuesday.

Woolworths Group chief executive Brad Banducci said it had been a challenging quarter for the New Zealand part of the business.

“The impact of Omicron, which was felt later in the quarter, led to supply chain disruption and out of stocks that peaked in March.”

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Total sales for the quarter were up 3.8% compared to the prior year, driven by higher average selling prices, with comparable sales increasing by 3.1%

“Total sales increased by 3.8% despite lower item growth, with average prices increasing 3.6%.”

The value of e-commerce sales lifted 18.3%.

Dairy and meat prices were high, there were increased freight costs and fruit and vegetable prices were also higher due to challenging agricultural conditions.

Woolworths New Zealand managing director Spencer Sonn said during the last quarter nearly 3000 staff were away as a result of Covid, including nearly 50% of its team in its major Auckland distribution centres.

“While sales were steady, our Covid-19 related costs increased significantly as we prioritised keeping our team and customers safe. Woolworths Group has lowered its profit expectation for the New Zealand business as a result,” he said.

The company expected a profit of $120 million to $140m this half-year, a decline of up to 28% compared with the second half of the last financial year.

“Despite this profit decline, we are continuing to invest extensively in Aotearoa. This includes a $1 billion investment plan to upgrade and build new stores across the motu, create new jobs, strengthen our supply chain, and drive digital innovation,” he said.

Sonn has called for customers to stop blaming supermarkets for the price hikes.

He said in the last 10 months, it received close to 1000 cost-increase requests from suppliers, more than double the same period the year before.

“Cost increases from our suppliers aren’t just an extra cent here or there. The average increase we’re being asked for is just over 9%. On some products, suppliers have put up their prices by more than 25%. On a $3 product, that’s a jump of 75c,” he said.

Correction: Countdown’s average sales increased 3.6% for the quarter, not 5.6%. Woolworths Group chief executive’s surname is Banducci. An earlier story incorrectly named him as Bunducci. (Amended May 3, 6.29pm)