Woolworths' retail division saw like-for-like sales fall back 6.7% for the six weeks to July 26. Total retail sales dipped 3.2% for the 25 weeks to July 26.
Woolworths said that more of its sales had come from CDs and DVDs - low margin products. A lower proportion of sales came from clothing over the period. Woolworths said that fashion was a higher margin product for it. As a result, Woolworths expects the margin rate in the first half to be approximately 125 basis points below last year.
Woolworths said it was continuing to search for a chief executive, following the departure of Trevor Bish-Jones and that, in the meantime, it had undertaken a review of the group's businesses. The board said there was a "considerable opportunity" for Woolworths to build its value proposition around its more profitable small to medium sized stores.
Woolworths chairman Richard North said: "The retail business has seen a marked worsening of conditions in June and July in an increasingly competitive market. This is reflected in the sales figures for the last six weeks. In addition, sales over the first half as a whole have been achieved with a disappointing margin performance. Looking ahead we remain cautious about the outlook for retail given the background of a weakening consumer economy. But we have strong operational management in place in all parts of the business who are working hard to ensure that the needs of all our customers – both wholesale and retail – continue to be met."