Comparable store sales growth for supermarkets in Australia in the three months to June were the weakest in seven quarters.

But there are signs that tax cuts that started at the beginning of the month have given sales a fillip, with chief executive, Michael Luscombe, saying a weak June had been followed by strong early July results for some of the discretionary stores.

"If I was to make a judgement on the last two weeks, I'd have to say we're back to normal," he said.

"In fact, we've passed back to normal. Big W and Dick Smith had a fantastic start to the year. Our hotels had a great start to the year, our supermarkets had a great start to the year."

Food and liquor sales grew 4.9pc compared with the same stores a year earlier, with sales in real terms crimped by 2.9pc inflation in food prices.

Refurbishment of 109 stores in the June quarter hampered sales growth by up to 30pc in some stores in some weeks, Mr Luscombe said.

"There's no doubt there is a price to pay in sales, but we believe it was the right decision to invest in the future, particularly given the results that we're getting out of both Big W and the supermarkets once we refurbish them," he said.

Woolworths recently experimented with upmarket groceries, launching a pilot Thomas Dux store in Sydney's Lane Cove, with another set to open next month in Paddington.

Mr Luscombe said customer response had been better than expected, and locations for further sites were being considered.

Mr Luscombe did not shed light on future plans for India, after an analyst this week suggested Woolworths might expand its presence there beyond consumer electronics wholesaling.

"Until the foreign investment rules change in India, and whilst we hear and see smoke signals on a regular basis, nothing's changed," Mr Luscombe said.

Fourth-quarter sales exceeded the expectation of Tolhurst analyst Ian Munro, who said store improvements would boost future margins.

"If you look at the product mix towards the higher-margin fresh products, that should flow through to gross margin," he said.

"It's going to come back to benefit them in FY09 and FY10 once their stores are refurbished and they get that initial sales uptick."