As separate data on Wednesday showed a slowdown in inflation across the wider economy, Woolworths said average prices fell by 0.3 per cent in the quarter compared with the prior year. Excluding fruit and vegetables and tobacco, average prices were down 1.8 per cent.

ABS figures showed the consumer price index rose 2.8 per cent in the September quarter - a reading within the Reserve Bank’s target band of 2 per cent to 3 per cent. However, the RBA’s preferred underlying measure of inflation remains outside the central bank’s target band, and most economists believe the RBA is unlikely to cut interest rates until early next year.

Online shopping sales have soared up 21.2 per cent to $2.4 billion from the previous trading year. The Disney collectable promotions drove an increase in profits in addition to online sales of 23.6 per cent, and the Petstock acquisition in January has yielded an increase in sales of 5 per cent.

Yet, customers at Woolworths are trading down to home brand items and specials, which has affected sales figures. Woolworths said sales of own and exclusive brands were up 6 per cent in the quarter.

“Right now, what customers are going to hear from us is what is happening in terms of value, promotion, specials,” Bardwell said.

“We’ve seen customers shift more into specials and that’s been a pattern that we’ve seen across a number of key categories for us. That is absolutely a factor which has an impact on our margins.”

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Woolworths and Coles are set to fight allegations they tricked customers with fake discounts, claiming the cases against them are misconceived. The Australian Competition and Consumer Commission claims the companies violated consumer law by misleading shoppers on hundreds of popular supermarket items with their “Down Down” and “Prices Dropped” campaigns, and illusory discount tactics.

Despite these claims, research from the e61 Institute indicates that Australian shoppers are likely to keep going back to the same supermarket.

Last week, Woolworths’ barrister told the Federal Court that the ACCC’s case was “misconceived.” Bardwell would not be drawn on the specifics of the case on Wednesday.

“We’re engaging with the ACCC on a number of factors right now. Yes there is the court case before the court, so I highly respect that process and will not make comment on that specifically,” she told journalists.

The blockbuster court case comes as the supermarket industry is also facing scrutiny from an ACCC inquiry into competition in the sector, amid political debate over “gouging.”

“There is also the ongoing grocery review that is underway, and we continue to engage all the way through in a very constructive way in that review,” Bardwell said. “As I said before, we will be no doubt learning things that come out of that.”

Woolworths’ update also showed Big W sales were down 0.9 per cent in the quarter, which the company attributed to lower average selling prices and customers trading down to lower-cost options.

Bardwell, who previously ran the supermarket giant’s ecommerce and digital business Woolies X, has been chief executive since the start of September. She replaced former chief Brad Banducci, who announced he was stepping down earlier this year.

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