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What to expect from the Woolworths (ASX:WOW) Q3 update

The Woolworths Group Ltd (ASX:WOW) share price will be on watch this week when it releases its Q3 update. Here’s what to expect…
The post What to expect from the Woolworths (ASX:WOW) Q3 update appeared first on The Motley Fool Australia. –

Woolworth share price upgrade response to asx share price represented by hands holding up the word wow

The Woolworths Group Ltd (ASX: WOW) share price could be on the move this week when it releases its third quarter update.

Ahead of the release, I thought I would take a look to see what the market was expecting from the retail conglomerate.

What is expected from Woolworths in the third quarter?

As I mentioned here earlier today, analysts at Goldman Sachs note that the supermarket industry is entering an “interesting phase”.

This is because it is now cycling through the COVID-19 pantry stocking boom from the height of the pandemic.

Furthermore, the broker notes that National Australia Bank Ltd (ASX: NAB) retail sales data points to a sharp decline in supermarket sales during the month of March.

The banking giant “reported cashless retail sales in the Supermarket and grocery segment to have been down c. -14% in March,” Goldman explained.

What does this mean for Woolworths?

While the broker expects Woolworths to have outperformed rival Coles Group Ltd (ASX: COL), it is still forecasting a decline in sales.

Goldman expects Woolworths to report revenues of $16.3 billion for the third quarter, down 1% on the prior corresponding period.

This will be driven by a 1% decline in comparable store Australian food sales, a 2.5% decline in comparable New Zealand food sales, a 2% increase in comparable liquor sales, and a 10% jump in BigW comparable store sales.

Is the Woolworths share price in the buy zone?

According to the note, Goldman Sachs remains positive on the retail giant and has retained its buy rating and $43.60 price target on its shares.

It commented: “While sales are expected to be volatile, we continue to believe that industry profitability will be manageable over CY21 and believe the current market concerns over a price war in the sector are overstated.”

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of COLESGROUP DEF SET and Woolworths Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

The post What to expect from the Woolworths (ASX:WOW) Q3 update appeared first on The Motley Fool Australia.

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