Woolworths Group Ltd (ASX: WOW) shares are rising on Wednesday morning.
At the time of writing, the supermarket giant's shares are up 2% to $27.52.
This follows the release of the company's first quarter sales update before the market open.
Woolworths shares higher on sales update
For the first quarter of FY 2026, Woolworths reported group sales growth of 2.7% year-on-year to $18.5 billion.
This reflects 2.1% growth in Australian Food sales, a 6.2% jump in Australian B2B sales, a 2.5% increase in New Zealand Food sales, and a 3.3% lift in W Living sales.
In respect to the key Australian Food business, which accounts for 75% of its overall sales, its growth was driven largely by WooliesX.
Food Retail sales increased 2.0% (3.8% ex. Tobacco) to $13.73 billion, whereas WooliesX sales increased by 11.3% to $2.55 billion. The latter was driven by continued growth in Same Day and On Demand propositions. It notes that MILKRUN remains the fastest growing eCommerce proposition and is now available at 628 stores with 113 new stores added during the quarter.
The W Living business recorded a 3.3% lift in sales to $1.39 billion for the three months. This reflects strong Petstock sales growth and a relatively flat performance from Big W.
Australian B2B total sales increased by 6.2% during the quarter to $1.56 billion. This was driven by strong growth in B2B Food, which offset lower B2B Supply Chain sales.
'Below our aspirations'
Woolworths Group's CEO, Amanda Bardwell, acknowledged that its performance was below aspirations during the quarter. She said:
While the Q1 sales performance was below our aspirations and there remains more to do, the changes we are making to improve value, convenience and availability are being recognised by our customers.
Group VOC NPS increased by three points compared to the prior year and four points compared to Q4 F25 largely driven by improvements in Australian Food and New Zealand Food.
Commenting on the key Australian Food business, Bardwell revealed that the company has been busy boosting its value offering to drive higher traffic. She explains:
Australian Food sales in Q1 increased by 2.1% with Woolworths Food Retail sales increasing by 3.8% (ex. Tobacco). In September, we increased customer engagement through Rewards offers, eCommerce investment and weekly promotions to drive traffic and sales with item growth showing a modest improvement in trend during the quarter.
We also added over 100 products to our Lower Shelf Price program, bringing the total to over 750 products with low double-digit unit growth across the program and supporting a strong improvement in Value for Money VOC. Average prices (ex. Tobacco) compared to the prior year have now declined for seven consecutive quarters.
Outlook
Bardwell appears cautiously optimistic about Woolworths' prospects in the busy Christmas period after an improved performance early in the second quarter. Speaking about the company's outlook, she said:
Looking ahead, we are cautiously optimistic about our key trading quarter and we have strong plans in place for our customers for the festive season including a refreshed seasonal range. Woolworths Food Retail sales in Q2 to date have increased by 3.2% (5.0% ex. Tobacco) as we continue our focus on rebuilding momentum. It will take some time for the full benefits of our strategic actions to be realised but we remain confident the steps we are taking will lead to meaningful improvements for our customers and our shareholders.
