Woolworths Ltd (ASX: WOW)
WOW Details
Surging on first quarter salesgrowth: Woolworths Ltd (ASX: WOW) has been tracking well with its strategies on turnaround and regaining price trust with customers, as demonstrated through its quarterly result. WOW’s voice of customer scores now touched high levels of 83% in Supermarkets. The group reported a 4.9% rise in its first quarter 2018 food sales for Australian supermarkets to $9.63 billion despite high deflation in fruit and vegetables. This is said to be better than its competitor, Wesfarmers-owned Coles, which reported for a slower than expected growth in first quarter comparable food and liquor sales (0.4%). On the other hand, WOW has continued with its sales momentum from the second half of FY17 and has been restoring its customerspost putting efforts and money in improving the services and reducing fresh and packaged grocery prices. Woolworths supermarket sales rose 4.9% on a same-store basis against Coles that had reported same-store food sales growth of 0.3%. Rollout of Pick up to all Woolworths and Countdown supermarkets has been beneficial to the group.
First Quarter Sales (Source: Company Reports)
There was a slight dip in New Zealand food sales with comparable growth of 2.7% while comparable sales from Endeavour Drinks unit surged 3.3%.Sales at Big W were up 2.9% in the 14 weeks to October 1, at the back of discounting and clearance activity. The group is now expected to return to profit growth soon. The stock rose 2.3% on October 31, 2017 and we maintain a “Buy” on the stock at the current price of $25.88
Myer Holdings Ltd (ASX: MYR)
MYR Details
Defending allegations from Premier: Myer Holdings’ stock is seen to be again under some pressure with Solomon Lew’s Premier Investments considering a legal action against the group overan alleged lack of disclosure by the retailer. Premier has specifically highlighted that trading in the MYR shares is happening on an uninformed basis. Further, there are allegations that MYR has misled Premier with regards to buying of 10.8%stake in Myer, and is now denying board seats.Citing a risk to the company, Myer rejected Premier’s request for members on its board at the back of a conflict of interest due to Premier's status as one of its suppliers and to other competitors as well.Meanwhile, questions have also been raised against the so-called New Myer turnaround strategy while the group is putting across all arms to defend the strategy. Given the uncertainty revolving around the stock, we believe it would be better to wait and watch for further developments, while retaining a “Hold” position at the current price of $0.765
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