Giant grocery operator Woolworths Ltd announced on Monday a likely retreat on its earnings guidance for fiscal 2011 as it cited that shaky disposition in consumer spending and volatility in inflation levels, interest rates and uncertainty in the global economy pushed down the prospects of the retail sector.

Following Woolworths' more than $25 billion sales projection in the firs half of financial year 2010/11, the company said in a statement that its half-year and full year results for the current fiscal year could see some downturns in the period, which is a departure from its August earnings prediction of up to 11 percent.

Woolworths said that challenging conditions confronting the economy prompted revisions on its profit guidance, where the company's half net earnings are now expected to grow by between five and six percent, with its earnings per share (EPS) possibly moving up by seven percent at most.

The company added that full year net profit after tax is now only projected to experience growth of up to six percent, with its annual EPS rising by as much as seven percent, effectively deviating from the August growth projections of between eight and 11 percent.

Woolworths managed to achieve a 10.1 percent spike on its annual net profit in financial year 2009/10, en route to some $2.02 billion worth or revenues but that feat, according to the company, would be hard to even duplicate in light of the uncertain economic indicators and the rising costs largely fuelled by the recent flood disaster that had hit Australia.

The giant grocer said that the general situation could possibly lead to a relatively soft trading condition as consumers will most likely hold back on their shopping behaviour.

Notwithstanding, Woolworths' first half results for the current fiscal year yielded encouraging figures as its sales jumped by almost four percent to $25.358 billion over the period's first 27 weeks, while its main supermarket sales soared by 3.5 percent to $23.9 billion.

However, the company' Big W store outlets saw sales decline of 2.8 percent to $2.39 billion though Woolworths said that the retreat has been eclipsed by sales growths on its petrol and food/liquor divisions, which were able to post improvements that respectively reached $2.945 billion and $18.7 billion.

Woolworths said that its comparable store sales grew by 2.2 percent in the half year and by 2.5 percent in the December quarter while its New Zealand business operations brought sales of up to $2.183 billion as well as its consumer electronics division, sales of which in the first half surged by 6.2 percent to $1.045 billion.