The rapid rollout of Masters Home Improvement stores has resulted in some outlets canni- balising one another's busi- ness, according to Woolworths executives.
The DIY chain Woolworths launched in 2011 in partnership with US hardware retailer Lowes to challenge Bunnings' dominance has not been able to be too choosy about development sites to reach new store targets.
There were 45 Masters stores at the end of the third quarter, delivering sales of $179 million. While that was up 41 per cent from a year earlier, sales per store slipped to $4 million from $4.4 million.
Bunnings' $2.09 billion in quarterly sales came at $6.5 million per store.
"There has been a lot of cannibalisation of our own stores because of the way we've taken the development approvals as they've fallen," Woolworths home improvement managing director Matt Tyson said.
"It is still a very young business, with the average store only 16 months old."
He said it could take between four and five years for stores to reach maturity.
Mr Tyson took the reins of the division earlier this year. Masters lost $157 million last financial year but management insists the business is still on track to break even in 2016.
Woolworths managing director Grant O'Brien said there were no surprises in the latest figures as Masters of late had been opening a higher proportion of regional stores with lower sales volumes.
"You can't always pick exactly when you open a store and where you open a store in a perfect world," Mr O'Brien said.
"We take these if they fit our network plan and we open them when we can."
Like Wesfarmers a day earlier, Woolworths' quarterly sales figures disappointed a market expecting a better result. Its shares fell 1.9 per cent.
That was despite its Australian food, liquor and petrol sales rising 4.6 per cent, or 5.1 per cent when adjusted for Easter.
Woolworths drew even with Coles for the first time in at least four years in terms of comparable sales growth at 3.5 per cent.
That achievement was not a cause for celebration, Mr O'Brien said.
"There isn't a scoreboard here and a calendar to signify anyone here to do high-fives about anything to do with comp sales," he said. "The target for the team here is to improve comp sales and they've done that. Importantly, they've grown top-line sales at a faster rate than anyone else in the marketplace by some measure."
But Mr O'Brien did talk up a "terrific" increase in online grocery sales of more than 50 per cent.