Woolies Q2 sales up 4.8pc to $10.3bn amid focus on prices SUPERMARKET giant Woolworths is clawing back ground from archrival Coles, winning customers back with a keener focus on prices. Woolies, which owns Australia's biggest supermarket chain by store numbers, reported sales of $10.3 billion for the three months to December 31, up 4.8 per cent from the same period a year earlier, or 2.5 per cent when the impact of new store openings is stripped out. The sales number was at the low end of market expectations but it was the third straight quarter of improved sales growth for Woolies after the retailer posting a flat result in the third quarter of last financial year, its worst sales result since the 1990s. But it wasn't enough to beat Wesfarmers-owned Coles, which has now beaten Woolies on comparable sales growth for 14 straight quarters, including a 3.9 per cent gain in the December quarter. However when adjusted for price deflation, with Woolies slashing prices by 2.8 per cent compared to Coles' reduction of just 0.9 per cent, sales volume growth was actually higher at Woolies - 5.3 per cent for the quarter compared to 4.8 per cent at Coles. "The industry is still highly competitive and still suffering from some moderate price deflation," said Simon Bonouvrie, a portfolio manager at Platypus Asset Management, which owns Wesfarmers shares. Woolies chief Grant O'Brien described the result as solid and said the Australian food and liquor business had increased its market share, customer numbers, average transaction size and sales volumes when compared to the previous December quarter. The company, which also owns the Big W discount department store chain, hardware group Masters and the Countdown supermarket chain in New Zealand, reported sales of $30.04 billion for the first half of the financial year, up 4.8 per cent from the previous corresponding period, excluding the now-sold consumer electronics chain Dick Smith. Mr O'Brien said a pick-up in sales at Big W in December had followed through into January, but he was reluctant to portray the improvement as a sign the retail sector had turned around. "I think all retailers, us included, had to work hard to make Christmas a success," he said. I don't think consumers have woken up in December and suddenly feel completely confident again, there still is a level of lack of confidence in consumers and I think that will continue to be the case for some time. Mr O'Brien said consumers were still cautious overall, but were "in a better place this year than they were last year." The federal election, which was yesterday scheduled for September 14, was expected to provide additional certainty to the retail sector. "I'm looking forward to policies, hopefully from both sides of the fence, that are going to provide a bit more reason for confidence for our consumers and for businesses," Mr O'Brien said.