Woolworths blames plastic bag ban and Coles' Little Shop for drop in sales

Woolworths has blamed a ban on single-use plastic bags and Coles’ Little Shop campaign for hampering sales to start the current financial year.

The company delivered a 12.5 per cent jump in annual net profit to $1.7 billion.

But chief executive Brad Banducci said sales slowed in the first seven weeks of 2018/19 as customers adjusted to the removal of single-use plastic bags from Woolies checkouts in June. 

Rival Coles ended single-use bags in July but backflipped on a plan to charge for bags after public pressure and continued to give them away for free.

Woolworths has blamed the ban on single-use plastic bags for a drop in sales to open the 2018/2019 financial year. Source: File/AAP

Mr Banducci added the Coles Little Shop campaign has affected customer visits as many consumers with children try to collect the toys, and labelled it a “successful program”, News Corp reported.  

Woolworths’ new financial year sales have also been affected by falling prices for meat, fruit and vegetables. 

The group’s Australian Food unit, including nearly 1000 Woolworths supermarkets, reported a 1.3 per cent rise in comparable sales, which excludes new store openings, in the first seven weeks of 2018/19. 

That compares with a 3.1 per cent rise in comparable sales in the fourth quarter to June 24 and 4.3 per cent growth for 2017/18.

Woolworths has blamed the Coles Little Shop campaign for a drop in sales. Images: Coles

Mr Banducci said full-year figure was the “strongest sales growth in a number of years”. 

Woolworths’ ban of single-use bags from June 20 led to a “slowdown” in customer visits and slightly different items in customer baskets, he said.

“Our experience when we did our pilot stores is that it does take somewhere around eight to 10 weeks for customers just to adapt to the new rules and we’re starting to see that happen,” Mr Banducci said. 

The company had added more staff at checkouts since the ban and customers were starting to remember to bring their reusable bags, he said.

Woolworths’ full-year net profit was $1.72 billion, while sales across the group, which includes supermarkets, beverages, department stores, hotels and the New Zealand, were up 3.4 per cent to $56.73 billion.

With AAP