Is the Woolworths Group Ltd (ASX: WOW) share price a buy after Australian supermarket and grocery sales increased by 22% in March?
According to the official Australian Bureau of Statistics numbers, whilst overall retail sales increased by 8.2% it was the 22.4% growth of supermarket and grocery turnover which was particularly astonishing. The coronavirus has caused a huge amount of uncertainty for consumers.
The ABS said that "monthly turnover doubled for products such as toilet and tissue paper, and rice and pasta." Spending on canned food, medicinal products and cleaning products increased by more than 50% according to ABC reporting.
Woolworths and Coles Group Limited (ASX: COL) supermarkets were supposedly doing Christmas levels of sales for a sustained period. It wasn't Christmas hams and pavlovas that were being sold though – it was pantry items that were in high demand.
What does this mean for the Woolworths share price?
Clearly it has been supportive for Woolworths. Higher sales should mean higher profit this year.
There's going to be sustained demand for food from supermarkets with many restaurants and cafe closed.
The question will be how much has this simply brought forward sales. I can't imagine May's toilet paper sales will be as good as March and April. Many households will have plenty of rice, pasta and soup stored now too.
Since the share market started declining the Woolworths share price is down 16.5%.
The lower interest rate has probably helped the Woolworths share price remain higher. But I think the stocking up period is over and it would be a better idea to go for shares at beaten down prices rather than Woolworths which has held up relatively well. .
