Woolworths says it's continuing to eat into the market share of Foodstuffs amid a slowing in the pace of sales growth at its supermarkets in New Zealand.
Sales at its 165 Countdown stores rose 2.3% to $2.9 billion in the six months to the end of December, though a key indicator, sales at stores open at least a year, remained flat.
Woolworths chief executive Grant O'Brien said New Zealand is experiencing low growth and even lower inflation, while sales have suffered in comparison to the previous period when the Rugby World Cup boosted alcohol purchases.
Nevertheless, Mr O'Brien said Woolworth's continues to take market share from the Pak'n Save and New World supermarket chains, while it's attracting more people, who are buying more items and spending more.
He said the market is contracting, but Woolworths is continuing to grow share and customer numbers in New Zealand.
"We've worked hard to match Pak n Save on a whole range of categories and entry point pricing and we're doing that steadily and we're doing it responsibly, we could go in and burn a lot of money and not make any difference, we're doing it in a targeted way," he said.
Mr O'Brien said Woolworths ambition is to improve its competitiveness in the marketplace.
Prices edged up 0.1%, led by dairy products and more promotions of dry grocery goods.
The company opened four stores in the period, lifting the total number of Countdowns to 165, and it plans to open another four by the end of June.
Overall, Woolworths annual sales rose 5% to $A30 billion and the company's forecasting its full year profit to expand between 3 and 6%.
The company sold its Dick Smith Electronics business for $A20 million to Anchorage Capital Partners last year.