Woolies wins back shoppers

Woolworths' crucial comparable food sales for the first half have outshone those at fierce rival Coles in a sign that heavy discounting is luring shoppers back.

The supermarket giant's comparable food sales, which removes one-off events, grew 3.1 per cent in the second quarter and 1.9 per cent for the six months to January 1.

Coles' comparable food and liquor sales, unveiled a week ago, rose 1.3 per cent during the six months to December 31 and 0.9 per cent in the second quarter, which represented a significant slow down from its 4.3 per cent half growth in the same period a year ago.

Woolworths' improvement comes a year after chief executive Brad Banducci was appointed and the group invested more than $1 billion into lowering food prices in an acknowledgement that the previous leadership had put profit margins ahead of sales.

Mr Banducci said the number of transactions and items per basket have grown.

"This momentum gives us confidence that, while we still have a lot to do, we are on the right track," he said.

Woolworths swung back to a half-year profit of $725.3 million compared to the prior corresponding half's $972.7 million loss, which was largely due to impairments linked to the closure of its failed Masters hardware business.

The retailer said its supermarket earnings were down 13.9 per cent to $811.6 million for the half compared to the prior period; a bigger earnings drop than Coles' 2.6 per cent slip to $290 million.

Mr Banducci said the supermarket business's earnings decline was primarily due to the reinstatement of staff incentive payments, training and higher depreciation of investments.

Earnings at the group's discount department chain Big W declined 88.9 per cent to $8.1 million as comparable sales fell 6.3 per cent.

The group is reviewing its BIG W strategy, expected to be completed in the next few months, after the retailer's chief executive Sally Macdonald suddenly resigned in November after less than a year in the role.