High street retailer Woolworths offered further encouragement about its trading revival today after posting a 6.5% hike in first quarter sales.

Shares in the group rose 4% as the company reported a successful Easter trading period - one of its three most important trading seasons, alongside Mother's Day and the Christmas period.

Total group sales increased to £576.6 million in the 13 weeks to May 1, the group said in a statement ahead of the company's annual meeting.

Woolies also told investors that its store refit programme was on track with a further 12 stores converted already this year.

The company, which is in a recovery phase, said earlier this year that it would end expansion of its out-of-town Big W chain.

Today it said that there had been a high level of interest in these larger sites and that it planned to give a further update later in the year.

Chairman Gerald Corbett said: "The group's recovery programme continues to progress and the current financial year has begun as planned."

Under new chief executive Trevor Bish-Jones, Woolworths - which demerged from B&Q owner Kingfisher two years ago - has been undergoing an overhaul including improvements to distribution and product availability.

Group like-for-like sales increased by 1% in the first quarter. This included a 1% rise at its main 800-strong high street chain of stores and a 0.9% increase at Big W. Sales at music-to-video retailer MVC were up by 1.2%.

Sales at its wholesaling business Entertainment UK and audio-visual publishing group VCI grew 45% in the period.

Analyst Rhys Williams of stockbroker Seymour Pierce said: "This update reiterates our opinion that at last Woolworths is becoming a well-managed company, and this gives us confidence that the business should be able to significantly improve profitability."

Thursday May 27, 2004