The Woolworths Group Ltd (ASX: WOW) share price is pushing higher on Tuesday.
In afternoon trade, the retail giant's shares are up approximately 1% to $38.62.
Why is the Woolworths share price pushing higher?
Investors have been bidding the Woolworths share price higher today after the retailer's third-quarter update outperformed expectations.
According to the release, for the 12 weeks ended 3 April, Woolworths reported a 9.7% increase in sales from continuing operations to $15,123 million. As a comparison, the team at Goldman Sachs was forecasting group sales growth of 6.4% to $14.7 billion.
Woolworths third-quarter sales growth reflects the following:
- Australian Food sales increased 5.4% to $11,432 million
- Woolworths Supermarkets sales up of 2.4% to $10 billion
- Metro Food Stores sales up 7.3% to $241 million
- WooliesX B2C eCommerce sales up 38.1% to $1.1 billion
- New Zealand Food sales rose 4.2% to $1,736 million
- Australian B2B sales up 217.3% to $995 million.
- BIG W sales fell 3.5% to $989 million
What was the verdict?
Goldman Sachs was pleased with the result and highlighted that it came in ahead of is own and the market's expectations despite softer sales in New Zealand. It commented:
"WOW reported 3Q22 sales of +9.7% YoY and +2.6% beat vs GSe and +0.6% vs consensus. In particular, total Australian Food and Australian B2B combined (re-structured into two separate segments in 1H22) was +3.5% vs GSe. AU Foods comps came in +4.4% vs COL of +3.9%, GSe +4.0%, and consensus +2.4%.
NZ Supermarkets was below expectations due to a worse impact from Omicron-induced supply chain disruptions and global shipping challenges, and WOW announced that 2H22 EBIT will be NZ$120-140mn due to elevated COVID costs (GSe NZ$172mn) implying a potential 1.6%-3.0% shortfall to GSe Group EBIT forecasts for 2H. While Big W comps was -3.5% YoY, it was ahead of GSe -6.0% and off strong comps of +20.0% in 3Q21."
Goldman currently has a buy rating and $38.30 price target on Woolworths' shares.
Though, this recommendation and its valuation for the Woolworths share price could change in the coming days once it has fully digested the result.
