Supermarket wars get going again: Woolworths to cut prices

The Australian supermarket wars are far from over.

In the latest sally, Woolworths (ASX: WOW) has announced that, starting tomorrow, it will cut prices – up to 33% in some cases — across hundreds of items at its stores, including on MSA Australian beef, sliced and shaved ham, International Roast Coffee, Tip Top bread and Arnott’s multipacks.

It is the company’s “biggest ever drive on value” with customers likely to find, on average, between “40 and 50 Every Day Value price cuts in every single aisle,” according to a Woolworths press release, which cited competitor Coles, owned by conglomerate Wesfarmers (ASX: WES).

“While we know that Woolworths is consistently cheaper than Coles on a comparable basket across the store, we are constantly looking for new ways to offer our customers ways to save. Looking at an average basket, Every Day Value price cuts could save Australian families more than $200 between now and Christmas, and almost $400 in a year on some of the most popular products on their shopping lists,” said Tjeerd Jegen, managing director of Woolworths supermarkets.

In the most recent quarter, Woolworths sales from its supermarkets division grew 5% and sales from continuing operations grew 5.7% over the third quarter of 2012 to $14.4 billion. The company has guided to between 4% and 6% growth in net profit after tax for the full year 2013.

Woolworths shares are down about 10% since the end of April, while Wesfarmers shares have slid 5% and the S&P/ASX 200 index (Index: ^AXJO) (ASX: XJO) has fallen a little more than 2% over the same period.


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Motley Fool contributor Catherine Baab-Muguira has no financial interest in any company mentioned in this article.

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