Woolies gets the better of Coles AUST Business 24Jan (extract)...

Woolies gets the better of Coles AUST Business 24Jan (extract)

Investors are cheering fresh signs of recovery at Woolworths, with UBS calling a bottom after suppliers declared it “won” Christmas over bitter rival Coles. In a note to investors, UBS analysts headed by Ben Gilbert noted that Woolworths closed the gap on Coles sharply through the festive trading period in the latest UBS supplier survey.

Woolworths saw its overall score lift 0.6 points to 6.2, while Coles booked a 0.3 point dip to 6.8, a signal of a faster-thanexpected turnaround. “Importantly, Woolworths improved in key customer facing areas such as price, on-shelf availability and in-store compliance,” Mr Gilbert said. The most notable improvement was staff morale, which lifted an impressive 1.2 points, and in our view is indicative of a better performing business with a clearer direction. “While pleasing to some extent, these trends were to be expected given the magnitude of investment over the past 18 months (more than $1 billion), albeit the pace is quicker than implied in UBS estimates.”

The supermarket operator still trails Coles in 25 of 26 subcategories but, importantly, it has ramped up the pressure on its key rival. Woolworths endured its 29th straight quarter of underperformance in the first quarter of fiscal 2017. However, the gap of 1.1 percentage points in comparable sales growth was the closest since the fourth quarter of the 2014 financial year.....