Woolworths Limited announced first quarter sales were $14.6 billion, a 4.9 per cent increase on the previous year.

CEO Grant O’Brien described this has a solid start to the year considering how retail conditions remain challenging.

“The retail sector continues to be impacted by a lack of consumer confidence which means we have to work harder for every dollar. General merchandise is particularly affected, especially when combined with the deflationary effects of the high Australian dollar,” he said.

Highlights for the quarter included its supermarket division, which saw first quarter sales increase 5.8 per cent from $11.9 million to $12.6 million. Its Australian food and liquor sales alone were $9.7 million, an increase of $0.4 billion or 4.4 per cent over last year.

“Clearly this is a tough trading environment with continuing deflation across key product categories. Fresh food was a standout performer, with strong sales, particularly for new season launches such as lamb and mangoes,” Tjeerd Jegen, director of Australian supermarkets and petrol, said.

But despite reporting positive results, Woolworths continues to trail behind rivalry Coles where its sales grew 5.2 per cent for the same period.

On the other hand, things were looking a little grim for BIG W. It reported sales for the quarter were $1.04 million, a 2.7 per cent decrease from the last quarter.

It blamed the slide in numbers in customer transactions and unit sales for the decrease, as well as the continuation of price deflation averaging 5 per cent during the quarter, particularly in home entertainment and toys.

As for the company’s new entry to the home improvement market with the opening of Masters Home Improvement in September, sales increased 6.2 per cent to $188 million.