Woolworths Group Ltd
ASX:WOW
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Woolworths Group Ltd
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Thank you for standing by, and welcome to the Woolworths Group F '20 Q1 Analyst Sales Announcement. [Operator Instructions] I would now like to hand the conference over to Mr. Brad Banducci, Managing Director and Chief Executive Officer. Please go ahead.
Good morning, everyone. Thank you for joining us this morning for the Woolworths Group first quarter sales results for F '20.Joining me in the room this morning is Stephen Harrison, our CFO; Claire Peters, Managing Director of Woolworths Supermarkets; Amanda Bardwell, Managing Director of WooliesX; David Walker, Managing Director of BIG W; Steve Donohue, Managing Director of Endeavour Drinks; and David Marr, our Chief Operating Officer. Also joining us on the phone is Natalie Davis, Managing Director of Woolworths New Zealand. Before I turn to sales, I wanted to address the other announcement we made to the ASX this morning.As you'll be aware, we recently implemented new enterprise agreements for Woolworths Supermarkets and Metro stores, BIG W, BWS and Dan Murphy's. After we implemented, the Woolworths Supermarkets and Metro enterprise agreement, we received feedback from a handful of our salaried team members about their pay relative to our enterprise agreement waged team members. This sparked the beginning of our review to compare payments and conditions and terms and conditions for our Woolworths Supermarkets and Metro salaried store key members against the General Retail Industry Award. Annual salaries for store team members are set to cover ordinary working hours and reasonable overtime. However, team members are entitled to be paid the higher of the contractual salary entitlements, or what they would otherwise have earned for actual hours worked under the GRIA. The review has found the number of hours worked, and when they were worked, more importantly, were not adequately factored into the individual salary settings for some of our salaried store team members. The review over the past years have found that approximately 5,700 salaried team members at store level have not been paid in full compliance with Woolworths Group's obligations under the GRIA. Our processes confirm that current and former salaried team members have been paid in accordance with their contractual entitlements, and there is no evidence that these shortfalls in payments have in any way been deliberate. This issue does not affect team members that are covered by one of our enterprise agreements, of which there are more than 100,000 in Supermarkets and Metro. Despite this, we at Woolworths pride ourselves on putting our customers and our team first, and in this case, we feel we've let down many of our team members. And for that, as an executive team, we're deeply sorry. We're determined to make this right and rectifying these payment shortfalls is our highest priority. Affected current and former salaried team members will receive their full entitlements, including backpay with interest and superannuation contributions, as soon as possible. Interim -- initial interim back payments to affected Supermarkets and Metro team members for the 2 years review, 2018 and 2019, will be made before Christmas. We have invited external control from PwC to help us undertake an in-depth review of all of our awarded covered salaried team members across all of our business and all of our functions.While this has begun in Woolworths Supermarkets and Metro, it is -- -- it will be standard, as I say, to BIG W, BWS, Dan Murphy's part of the businesses, and we hope to complete this review by the end of this financial year. We've [ completed in the reviews ] to understand not what we pay our salaried team members, but what they actually should be paid in light of the actual roster they work. And for that, we have to use in our clock in and clock out data, which is an extremely complex process which is why it will take as long, as I've mentioned. And as we go through it, we'll be making interim payments as we complete any year of analysis for any one of our businesses. We have already self-reported to the Fair Work Ombudsman and put out an extensive plan to ensure our salaried team members are paid correct and compliant moving forward. Taking the existing 2 years of data for Woolworths Supermarkets and Metro and using the initial modeling across the group, the estimated one-off impact of remediation, assuming the issue could go back as far as the implementation of the modern award in 2010, is expected to be in the order of $200 million to $300 million before tax. As I say, we will hope to complete the review by the end of the financial year, a full review, but we will certainly provide an update at the group's half-year earnings results in February.Turning now to sales. And I do expect to get a number of questions on that, of course, in the Q&A. But if I could just transition through some introductory comments now on sales and then come back to the Q&A. Today, we reported group sales from continuing operations for F1 (sic) [ Q1 ] of F '20 of $15.9 billion, up 7.1% on the same quarter last year. It has been a pleasing start to the year with good sales momentum across the group. Customer metrics were generally robust and resilient. In Australian Food, given the above forecast sales and the number of the changes we've made to our store operating model in-store. Group Online sales were 37.4% for the quarter and was driven by a strong performance from both Australian and New Zealand Food. New Zealand Food (sic) [ Australian Food ] sales for the quarter were $10.7 billion, an increase of 7.8% on the previous year. Comp sales increased by 6.6%, driven by Online and a successful Lion King Ooshies and Discovery Garden campaigns as well as critically entitling [indiscernible] in the same period last year. We've continued to expect sales momentum to moderate in Australian Food for the remainder of F '20. Customer metrics declined, marching on the previous year with Voice of the Customer Net Promoter Score down 1 point to 49 and store-controllable Voice of the Customer for Australian Food down 2 points versus last year at 80%. Queue Wait Times remain an area of opportunity and have been impacted, both by the higher-than-expected sales growth and our new assisted checkout experience. We've completed several new renewals in the quarter, including the opening of our newest Metro site in [ Clermont ]. We expect to do 70 to 80 renewals in the current financial year as with previous years. And the rollout of Fresh Made Easy, which I'm sure I'll get some questions on, continued across the quarter with new equipment, point-of-sale and planograms rolled out across the Woolworths Supermarkets fleet. To help support communities impacted by drought, [ we launched an appeal ] with a $2 limited edition sunflower seeding kit as part of the Woolworths and Discovery Garden program. We also matched every dollar raised with the funds to be distributed to appeal partners, Rural Aid, The Salvation Army, Foodbank and Lifeline, to enable financial support, on-farm support, including stock feed, additional counselors and assistance to address food insecurity in drought-impacted areas. WooliesX continued to deliver a strong performance with Online sales in Australian Food up 43% on last year, driven by Pick Up growth, Lion King Ooshies and the Discovery -- and the launch of Discovery Garden. There were record sales levels of visits across our digital platform with Online penetration reaching 4.5% for the quarter as we continue to make improvements to the digital experience, including the launch of our new delivery subscription model, Delivery Unlimited. In Woolworths Rewards, we recently revamped our partnership with Qantas Frequent Flyer to improve the Woolworths Rewards to Qantas Frequent Flyer point conversion rates as well as make it much easier for customers to access the program.New Zealand Food had a strong quarter with strong sales -- with total sales increasing 4.6% to NZD 1.8 billion driven by strong trading across Fresh, Health and Own Brand as well as improvements in in-store availabilities. Comp sales growth of 4.8% also benefited from the first 3 weeks of a successful Disney Words campaign and the new Great Price program, which replaces [ historical win ] program which was Lockdown and Low Price, Always -- Every Day Low Price. Online sales continued to be strong with growth of 38% in the quarter and an increase in penetration to 8.5% of [ sales ]. CountdownX continues to focus on user experience, including high levels of Same Day convenience.Endeavour Drinks' sales increased 4.9% to $2.2 billion with comp sales growth of 3.2%. Sales growth for both BWS and Dan Murphy's was driven by growth across all major categories with the strongest growth in Beer and Spirits, and that really was in craft beer and in particular with [indiscernible]. Online sales were 21% -- Online sales growth was 21% compared to last year, and Online penetration increased to 6.5%, supported by the rollout of new initiatives from EndeavourX, including the launch of new apps for both BWS and Dan -- and My Dan’s -- My Dan Murphy's or now My Dan’s loyalty program was also relaunched during the quarter with membership increasing to 3.7 million members. BIG W sales increased by 2.6% to $926 million in the quarter, with comp sales increasing by 4.4%, making it the sixth consecutive quarter of positive comp sales for the business. Sales growth was driven by good momentum across most customer [ metrics ], and particularly in our critically important apparel category, with good momentum across seasonal lines. Store-controllable Voice of the Customer continues to improve to 80% at the end of the quarter and up 1 point on last year. Online sales growth remained strong, but moderated in Q1 at 21.2% after cycling 156% (sic) [ 159.1% ] growth from the same period last year. Hotel sales for the quarter were $468 million, an increase of 5.5%. Comp sales increased by 3.6%, with strong growth in Food and Bars driven by refurbishment, promotional activity and key sporting events.In summary, we are pleased with the good momentum for the start of F '20 and now focus on our preparations for Christmas and the holiday season ahead to ensure customers have the best possible experience, both in-store and online in all of our businesses. We have very busy agenda in F '20 across the group, including the investment of our new Customer Operating Model in Woolworths Supermarkets, and the transition to a new automated [ and quality team ] in Victoria. And I would like to thank our customers and team, particularly given our -- the prior announcement for the ongoing support. The Endeavour Group transaction is also progressing as planned with the upcoming shareholder vote on the Restructure Scheme on 16th of December, the next key milestone. I would like to now turn the call over to questions. [Operator Instructions]
[Operator Instructions] The first question comes from Michael Simotas from Jefferies.
First question from me is relating to the collectibles program. So clearly, basket size has grown as a result of these programs. Just sort of looking at your sales mix as well as the trends through the quarter, do you think that there was a significant volume of sales pulled through to the quarter, i.e., you will suffer that in the next quarter? Or are you pretty comfortable that you've picked those up and things just moderate to a more normal level rather than giving it back?
Thanks, Michael. Let me give a high-level answer and then I'll turn to Claire to provide a bit more color and detail. Look, there's no question that collectibles with the minimum $30 to get the fees or the [indiscernible ] to a slightly highly basket size. So you've clearly seen a slightly higher basket size driven by that, but also merchant online, of course, wasn't contributing to the basket size, given that we get a much larger basket size in Online. Actually, what's interesting, the strong growth in our basket size, despite the fact we're cycling the single-use plastic bag launch of last year, we'll be selling a lot less plastic bags. So it was a very good [indiscernible] growth per basket. But we don't really believe that has impacted or pulled forward a lot of sales out of Q2. And I'll turn it over to Claire to provide a little bit of color to that.
Thanks, Brad. Hello, Michael. I would echo what Brad has said and when we look, particularly at our Fresh Food category in quarter 1 and also for the first couple of weeks, which clearly would be less impacted by country fill-in. We're not seeing that country fill-up across any of our areas. Fresh Foods, particularly gives us comfort that that's not going to happen..
Okay. That's wonderful. And then the second question from me is just relating to the comment that sales were higher than expected, and as a result, Voice of the Customer slipped a little bit. So it sounds like you ought to have put a little bit more labor into the stores, if you could have. Is that a reasonable way to think about it? And just sort of bearing that in mind, how do you think the stores were sort of running from a shrinkage perspective, et cetera, given you were running a little bit short on service?
Yes. Look, I mean -- thank you, Michael. It would be fair to say that our sales ran above what we forecast, and we do schedule our hours to forecast. So there was that issue. [ But clearly, one issue why ] we get a slight softening in our Voice of the Customer scores which are highly useful in our business because it provides an area of focus to address guidance for the second quarter. As you would be aware, we've moved in our soft checkout system to check out that process and the embedding of that process, plus the higher than forecast sales plus changes to our operating model means that there was a lot going on in-store at the same time. The #1 score that we need to work on clearly is checkouts, and that is a big area of focus going into quarter 2. So yes, it's a combination of the fact that no one factor by itself would have driven the softening but it's a combination of them. But it gives the team great focus in Q2, and we're really starting to see improvement in that regard.
The next question comes from Grant Saligari from Crédit Suisse.
Just the first question. Just to clarify some of the numbers around the wages spread, if we could. Would it be fair to assume that there would be a step-up in wages costs as you move the salaried team members to whatever their required payments are consistent with the award? And to do that, would we take that $300 million estimate and divide it by 10, and would that be an indicative number to be working to in terms of the wages expense impact ongoing from this?
Thank you. And listen, the sales announcement, sorry, I realize I should have addressed Michael's question about the sales announcement, [indiscernible] so I might come back at the end of this. So it is a sales announcement, we will come back at the half year, and quite clearly quantify where we are tracking on various aspects of our P&L. In the context of our business though, it is not -- it will lead to, clearly, increases in salaries, and we've already taken action on that, but it's not material in the context of the overall numbers which is why we're not calling it out at the beginning -- at this point. But expect more -- clearly, more detail on it. As with all of our initiatives at the half year, including staff costs, I would say on the staff costs, while I won't call out the number, we have had a good quarter of staff cost and are tracking in line with our plan. That is one of the positives, clearly, on sales that does help you in that regard.
Okay. Second question then maybe move on just on the sales result. I mean you're getting some tremendous progress on your digital initiatives. I mean your Online sales in Aus Food contributed 1.5% of your comps. In Countdown it was sort of more like 2.5% of your comps. But I noticed that in terms of penetration, you are starting to bump up closer to that 10% threshold we've discussed in the past as to the limit to which you would -- or where you would be limited in providing Online sales services through your supermarkets. So just wondering how quickly you can bring forward the next stage of technology there, and you've been talking obviously about some automation at the back of some of the larger stores.
So I mean it's a very interesting question that, we could talk for a very period long about. As the business grows, we're learning more and more how to manage the capacity in-store. And actually, our New Zealand business, which has a much higher penetration, is providing a lot of learnings back to the group, given if you're sort of looking at the numbers [indiscernible] up there and some of the numbers with specific stores are twice that. We're learning how to manage this in-store without interrupting or disrupting the customer as we go. So there is a lot more capacity available to us in our stores, 2/3 e-commerce. There's no question about that. But in parallel, as per our previous announcement, we are looking at establishing Macro performance centers and those are progressing through plan. They won't, however, make any material difference to our capacity in this financial year, it really is the next 21 addition to our business in terms of capacity. But it's amazing. Now that the business has hit scale, how much we're learning and how much refinements and process improvement we are managing to pull into us and how much additional capacity that opens.
The next question comes from Bryan Raymond from Citi.
First one, just on overall industry growth, and I think some of the earlier questions alluded to it. But if you combine yourselves and Coles, industry growth accelerated quite materially from 4Q '19 to 1Q '20, or at least the combined growth for the 2 of you you've got. Could you guys just make some comments around the outlook for the industry in terms of growth. We're obviously seeing some better inflation trend, but do you think the majors are taking share from the independents? Or do you think we're seeing just certainly a healthier level of growth across the industry? Yes, so maybe I'll leave it there. And just [indiscernible] in the 5.4% exit run rate that you guys managed to achieve after you're trading update in the final 6 weeks. That still indicates pretty healthy level of growth, yes, and certainly into 2Q '20.
Yes. Thank you. Thank you, Bryan. Look, I think we shouldn't shoot ourselves on our -- I'm just really pleased by the quarter, but you always need to look at the 2-year comp growth to sort of get some balance to move around. And on a 2-year basis, if you looked at our just top line sales number, it was just 7.1 for the group. But on a 2-year basis, that's about 4.5. In the context of food, really have 2 numbers, Bryan, for the first half at 4.9. So it's 4.85. [ So it's now fairly resolved ]. But we did benefit in Q1 across the group on relatively rigid trading the year before, and I think -- we certainly keep that in mind and find out that -- and it's a very important contextual fit. That aside for the moment, we come back to the growth, we did think that the growth for the sectors we participate in was relatively pleasing in Q1 across all of the sectors we compete in our calendar year. But a bit of color, it improved. There are very different ways you can measure it. We thought the overall sector grew between 3.5% and 4% for the quarter, which was, I think, a very pleasing number, certainly, slightly ahead of the long-term trend. In regard specifically to that in Q2, you may remember, Bryan, last year, it was a very challenging quarter [ in through there ] And some of the other sectors as well in Q2 with very inclement weather, in particular, at this time of the year as we went into the Spring Carnival. We are hoping, clearly, as we cycle that at a sector level that, hopefully, we'll continue to see a positive growth rate. But we're not in the business, of course, of forecasting that. But I should reference the fact that it was a slightly weaker quarter [ than last year ]. In terms of color to those numbers, we are seeing, as you would see from our trend line, a slow move towards neutral inflation/deflation. And we've seen that happen and progress in that regard.We did actually see fruit and veg go deflationary in Q1. So that sort of pulled us back, but we're starting to see, of course, in the long run, categories continued pressure and slow movements to a very neutral setting. And so I think that's quite important to call out. But we'll see how it plays through into the second quarter. And we are slightly inflationary in New Zealand as we see the same pressure applied there into. If we got it rigged, actually, we are still trading up across the sector, but the #1 watchout we would call out were these challenges really in wine, which is the lowest growth component of the overall industry right now. We haven't had a bad quarter, but it's still -- it's still bit of a challenge getting that back into growth. But the real high growth coming in the more cross categories [ I mentioned ] Beer and Spirits. If we look inside our discounted department store business, inside Big W, really it's again very hard to look at sector out of the portion of our business that has actually -- had the slowest growth has been really in our leisure comp sector, which is about electronics and gaming consoles and DVDs and things like that, but actually quite pleasing growth, in particular in the apparel sector, and we've benefited from that. So a very long answer to a simple question. We saw quite pleasing market characteristics in the first quarter. We are hopeful that will continue in the second quarter, but we're still very early into the quarter, and it really will be determined post-Halloween, as we get into the running to Spring Carnival and then, of course, into Christmas.
And then just my second one's just on BIG W actually and the slowdown in sales momentum that you saw there. But I also noticed your average sale price implied out of your volume growth and your like-for-likes actually flipped around to be a positive contributor. So I'm just wondering how your promotional campaigns went through the first quarter '20 and how that compares to the back half of '19 when you saw very strong sales that, I think you mentioned at that time, quite a lot of...
We don't think that [ as a buyer actually ] we don't think we had -- we didn't have a sales slowdown in Q1. We had a very deliberate move in mix in Q1, and I'll let Dave talk to it. So the route was all about businesses have a whole range of categories. Remember, that's particularly true in BIG W. And as we refocused our business and the whole translation of revenue into EBIT we've adjusted, where we focus and what our focus is, and we had a very pleasing performance in the categories we were most focused on. But Dave, I don't know if you want to provide any more color to that.
Sure. The thing that we are pleased about in the first quarter is just how we're adjusting our business a little bit. So as Brad said, in audiovisual, our sales growth has moderated and typically in categories like TVs, which are pretty low margin, obviously, electronic gaming and consoles, again, low margin. And again, we shifted our promotional mix away from those. But pleasingly, given some of the challenges we've had historically, what we're seeing is full price apparel sales are really strong for the quarter. So we're pleased with the momentum that we've got in there.
[Operator Instructions] The next question comes from Richard Barwick from CLSA.
Brad, I just want to ask a little bit more on -- around your new store customer operating model. And you referenced it a couple of times and it sounds like the -- actually implementing it has caused, perhaps, a few -- or some sort of negative impact in terms of Voice of the Customer. What exactly are the steps that you're taking? So what is this -- the new operating model? And I guess from a customer perspective, what are they seeing that is impacting them in the near term?
Thanks, Richard. Look, I'll speak to it in detail -- in high level and then I'll turn to Claire to provide a bit more color. Firstly, I wouldn't point at that as the reason for our customers' scores declining. It was a whole combination of factors and kicking through to the very strong sales, and as Claire has rightly pointed out to me [ on the side ], those sales were combined with the need for our checkout team members to be providing or giving us either issues or feeds which makes it an even more complex process. So I think no one factor led to a slight softening on the scores you're looking at. The reason we've put [ a customer ] operating model is because it is a very material change for us. We believe that it is the right thing and sets our business up for the future and is really focused on kind of customers who are shopping us and has a number of customer benefits. But any big change is very hard to do. It's just not straightforward in a business of our size and scale. I think the key for us is that we implemented a new operating model in Q1 with a very -- [ we tried ] to get it done [indiscernible] the team [ down ], get all the right training in place to ensure we had a good Christmas, but there are some very material customer benefits to us that I'll turn to Claire to talk about.
Yes. Morning, Richard. So far on the customer benefits, as we said at the start, this is all very much how we can get ourselves ready for the next-generation that our customers are wanting. So the specifics are around ensuring we have a salaried manager who is in-charge of our convenience business was critical. It wasn't around that one within our structure. And as we continued to see customer shop between processed, meat and seafood, the ability to manage that through Fresh service rather than traditional meat and deli counter. We're also already seeing, not only in the [ VOC ] pilot but now the national which is in line for 4 weeks, how customers have been able to move through those [ cases ] More with a salaried management team being upskilled on all those areas.From a team member point of view, as Brad rightly said, 10,000 team members did have the opportunity to apply for these roles. And the support that they've had in that is a significant managed training within the new areas. And we also brought all of our new Fresh teams [ involved ] With a new structure to Sydney to give them a 2-day event on not only their new role and their content training of that but also get them to understand some more of the product trends that they would want to test and trial, take that back to the store, take that back to their new team. Obviously with all of that, what was absolutely critical was we gave every opportunity of our team the ability to have a role in-store, which has meant we probably moved around 600 team members into new roles in-store and that's now what we're heavily focused on. Quite a few of those teams did go to our assistant service managers and that's where the emphasis now is in, in giving them training to be ready for Christmas.
Thanks. Thanks, Claire, for -- for those of you who are taking orders, checking us in-store, the true roles that Claire talked to which are critical roles, the many changes would be the Fresh Convenience Manager, which looks after chilled, bakery and our new Fresh Made Easy category, and Fresh Service Manager, which is the combination of our counters that [ we moved on ] on proteins, and you'll see those as very critical roles and investments for the future.
I guess -- so the point is that the -- when you actually referenced that new operating model, that is very much focused on the Fresh and Fresh Convenience, that part of the store, nowhere else in the store?
Obviously, a number of other changes that need to get adjusted in doing that, Richard. But I think, at the macro level, it's the key highlight. And one of the other benefits in that is that the assistant store manager really takes more direct accountability for the on-shelf availability in the long-life portion of the store, which gives the store manager themselves more time to focus on both Fresh and experience of the checkout. So we really want also to free up the store manager to spend more time on the critical areas as well. So that would be the, I guess, if you want to call that one of the benefits I think that, that would give the other one.
Okay. And just the second question. So far, as I'm with where Brian is going with, the comment that sales growth to moderate over the remainder of the financial year, how much of that is about just recognizing the -- sort of the boost that you got in this first quarter, and therefore, things -- you're obviously not going to track along at the same run rate? Or is it a comment that you generally believe as you progress through the second, third and fourth quarters that you'd expect growth to slow. Just want to clarify.
No. I mean this is based on the first and it's really looking at our 2-year comp numbers. We've got to be -- well, it's a wonderful quarter for the sell side. And we had challenges, but maybe probably [ the cause of ]challenges, in many ways, you would rather have than the alternative. So you've just got to be realistic if we look at the 2-year numbers and as we -- [ we constantly look at numbers ] in the first quarter.
The next question comes from Ben Gilbert from UBS.
I mean just -- interesting, the first question from me just from a strategic standpoint. You've obviously had a very strong quarter in Aussie Foods, and presumably, it was probably a little bit -- in response to Ooshies, a little bit better than you would have thought. So you probably got a little bit more money in the tank, I would have thought, around sort of GP dollars, at least. I'm just interested in how you think about that strategically looking forward over the next quarter, next 6 months, 12 months-plus? Do you sort of sit there and take the view, look, we're in a strong position, we've got good momentum, let's put some more money into this business to try and really retain the customers. Or -- I'm just interested in how you think about the strategic in terms of looking to capitalize on the momentum that you've got and potentially hold onto it for a bit longer?
Well, thanks. Ben, I mean, obviously, it's a sales call not an earnings call. We'll come back at the half year...
I'm not asking for profit. I'm just interested in how you think about returning...
Yes, look, I can say, we set ourselves some very stretched targets in terms of the way we want to transform our business during the year. And really our key focus, as always, in the last couple of years, is to execute the plan, where we come alive when we add extra things into the plan. The key thing is execute the plan and the key thing there is to just accomplish all those -- to where we want them to be, and that's where we're working very hard on particularly Q2 and just making sure that whether it's in digital, whether it's at the checkout, or whether it's in our new Fresh Made Easy part of the store that we give a great experience to our customers. And then very importantly, as we sort of talked to at the beginning, just coming back to our team and giving them the support they need, whether it's the training and development given our new operating model or just addressing this uncertainty in people's minds of whether they are eligible for a backpay. So I'm in Q1, the key point is Q2, and it's just really executing the existing plan which has enough ambition in it, I think.
And just on then, just maybe sort of close to Ooshies, can you give us any color around customer retention? Because I think if we look back to prior year, we've closed Little Shop. There's probably a lot of people driving past your stores to go to Coles, and then as soon as it ended, it seemed like you got quite a big bounce back. Interested in just how you're seeing customer retention, particularly some of the bigger shops like families...
Yes. I mean, obviously, I can certainly provide a little bit of color, but obviously it really does particularly impact the new and young families taking a significant proportion of the -- particularly the groceries in some extent to the [indiscernible] bond. And we [ did ] clearly in the quarter see more of them shopping with us than we had historically. So that was very pleasing.But I will say, it is very hard to call out how to the swing back will take place in Q2. And that's because we've had quite a peculiar quarter where for actually the reasons that when spring falls, we've had the licensing which is program written almost over there with the Discovery Garden program. So it's very hard at this stage for us to be very precise on what we may see happen with the customers given the fact that these programs really ran almost consecutively with each other, if you know what I mean. But the theory is, as you well know, is that once the program is over, the customer switches back. It's just hard to call that right now. It's one of the reasons we're calling out to critical importance of customer experience. If we want to retain any of them we have to provide a great experience in-store. I don't know, Claire, would you like to add to that?
I'd just echo what you said. We saw the retention continue through one platform campaign to another, but actually, we could be less than 8 weeks away from the treat of the day. Actually our focus is on execution of the plan and what we need to do for our customers.
And just very final -- just a follow-up for that. It doesn't really make sense to -- does it make sense to have another collectible type campaign in Christmas when people are less focused around collectibles and more focused around just getting in and buying a...
I hope that I -- if I'm right, it's not something we could talk to because obviously -- but I mean we are quite sensitive that we've just run 2 back to back and we need to also think about how we [ pull ] different programs. We will always have some form of community engagement program. I think if our Head of Marketing was here, he would say, Christmas is a community engagement program in and of itself. And so I can't talk to the specifics but we are quite sensitive to making sure we get the right balance because [indiscernible] are very quickly and then you're in the [ negative ]. So always we need to be quite cautious and thoughtful about that.
The next question comes from Johannes Faul from Morningstar.
Brad, I was wondering if you could give us a bit more color around the split or the mix of like-for-like sales for Metro stores and the supermarkets?
Look, thank you, but we don't split it out. It's something I'll take on notice for the future. We thought we had a number of Metros transitioning across -- surplus transitioning to Metros, so the numbers are a bit messy. In addition, with the major work that happened in downtown Sydney, given the number of stores we had there, there was quite a lot of disruption. So the numbers are noisy. So it's very hard to be precise. But I would say that our Metro stores grew in line, if not ahead, on a like-for-like basis to our supermarkets.
Okay, great. And then I was also wondering if you've seen any product mix contributing to your sales growth in terms of customers switching to more premium product?
That's really a very good question. I'll give a highlight and then I'll ask Claire. And also very importantly, I should call out is that as the new price increase on tobacco went through, we have started to see a material slowdown on tobacco sales. And so we -- that has become a reducing mix of our business in Q1 and that's continued into Q2. So that's worth calling out. It is also worth calling out that infant formula as a component of our business is also decreasing, at least relative to the allocation we had last year. If you look inside our business, and one of the reasons we've put in the Fresh Convenience Manager has been the continued growth in chilled products in our [ liquids ] as people sort of take a root definition on Fresh. So that's very important for us, and we -- that's why we wanted to invest team in chiller. So I think those are very important. And then the other 2 that's -- which are very important strategically that I'll let Claire talk to, have been a deliberate continued focus on health and international foods.
Yes. Thank you, Brad. So on those 2 particular categories, particularly in H-E-B, we saw some very pleasing uplift. It's fair to say that, that test [indiscernible] for our supplier partners in the quest of campaigns, which was the drawn basket in that area as well. But from a strategic point of view, our localization in health and international foods are winning and key events has, again, continued through the quarter, which we also continue to see.
The next question comes from Phil Kimber from Evans & Partners.
Just a question, if you could just run through broadly whether you saw any material geographic sales trends in other food, liquor or BIG W worth calling out, are certain states doing better than others?
Thank you, Phil. Actually, we have made comments in the past on how to pronounce sort of 2-speed economy between different states, et cetera, but there's not as many pronounced trends right now. We've seen actually quite a consistent growth pattern across the country. There are minor nuances at the moment, but I wouldn't [ overplay ] them at this stage. Certainly, our slightly more regional stores have slightly outperformed our Metro stores, but it really is more at the margin. There's been a relatively consistent growth rate over the quarter from our perspective across all of our businesses. Clearly, when you get to our liquor business, [ we find indicative ] more our beer as we're getting to the more sunny climates and further up in Queensland, but nothing I would call out. I'm just looking at the feed to see whether there's anything particular to be called out. Actually quite a consistent course that we felt for overall spend, overall consumer sentiment across both sides of the [indiscernible] front.
Okay. And then just a follow up, you mentioned there that you've seen a slowdown in tobacco, post the last excise rise. Is that something that you've seen in the past? Like, immediately after the excise comes through and you see a slowdown and then a bounce-back? Or is it a little bit different this time?
Look, [indiscernible] as you might imagine, but if I tell you what our head of buying in that area would say. Can be as often as short-term adjustments because this is the first time we've seen it continue on, and it looks like more of a structural change. But we'll wait and see in the upcoming weeks whether that is, in fact, true. But it does seem to be more structural than it has in the past where the [ material rate price ] has led to short-term reduction in sales and maybe there's a bit of a pantry stocking in truth in the pre-excise period as well. This has gone on longer and it's been deeper than we've seen in the past, as we specifically called it out.
At this time, we're showing no further questions. I'll hand back the conference to Mr. Banducci.
Thank you, as always, everyone, for joining us on our sales calls. I think the key headline message is we had good momentum in sales in Q1. It really was a follow on, in many ways, from the last week -- 6 weeks of Q4. But it's all about Christmas. We have the start-off in the run to Christmas, with Halloween tomorrow, and then the [ gallop's on ]. So as always, I'd encourage you to shop our business, the truth is in the store, and thank you for your time on the call today.