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Countdown posts 1.1% rise in 1Q sales as new stores openings offset weaker prices

Countdown, the New Zealand supermarket chain owned by Australian retailer Woolworths, increased revenue 1.1 percent in the first quarter of its financial year as it benefited from sales at new stores.

Sales at New Zealand supermarkets rose to $1.5 billion in the 14 weeks ended Oct. 5, from $1.48 billion in the year earlier period, Sydney-based Woolworths said in a statement. Comparable sales for the quarter, which excludes the impact of store openings and closures, fell 0.1 percent, impacted by flat inflation and continued subdued grocery industry market conditions, the company said.

New Zealand inflation accelerated at a slower than expected 1 percent annual pace in the third quarter, suggesting the Reserve Bank is likely to keep interest rates on hold for longer than previously expected. Food prices slipped 0.2 percent in the quarter, with grocery food down 0.7 percent, fruit and vegetables dropping 4.1 percent and alcoholic beverages declining 2 percent, according to Statistics NZ data.

Countdown said today that its overall prices were flat in the quarter as higher dairy prices were offset by lower prices across other products including grocery, bread, liquor and produce.

Countdown managing director Dave Chambers said the company has been cutting prices through its 'price lockdown' and 'price drop' campaigns, including reducing the price of a homebrand loaf of bread to $1. As a result of the campaigns, more people were buying these products, leading to growth in customer transactions and items sold, he said.

The supermarket chain, which competes with the Foodstuffs cooperatives' New World and Pak 'n Save chains in New Zealand, plans to open a new store tomorrow to take the total number of Countdown stores to 172. It also operates 59 Fresh Choice and Super Value franchise stores.

In the year earlier period, the company had 166 Countdown supermarkets and 56 franchise stores.

In Australia, parent company Woolworths posted a 3 percent rise in first quarter sales to A$16.12 billion, which it said was less than expected as it discounts prices amid increased rivalry. The company's ASX-listed shares fell 4.5 percent to a two-week low of A$34.38.