News: WOW UPDATE 1-Australia's Woolworths signals end to pandemic-powered sales boost

(Adds details on results, industry background)

April 29 (Reuters) - Australia's biggest supermarket chain Woolworths Group (WOW) posted a small rise in third-quarter sales on Thursday, joining rival Coles Group (COL) in signalling that customers were returning to pre-pandemic ways of shopping.

"In general, customer shopping behaviours continue to normalise," Chief Executive Officer Brad Banducci said.

Sales growth at drinks and hotels business as well as department store BIG W helped offset declines at its foods business in Australia and New Zealand that had seen a strong quarter in the early days of the pandemic due to panic buying.

The company expects sales across its businesses to decline in the current quarter, except hotels, which had taken a hit during the lockdowns last year.

No.2 grocer Coles had on Wednesday declared the end to panic buying at its supermarkets after reporting its first quarterly sales decline in over a decade.

For Woolworths, supermarket sales in Australia fell 4.7%, but it nearly doubled in e-commerce, a segment that is seeing tough competition between Coles and Woolworths, helping limit the division's decline at 0.7%.

Group sales edged 0.4% higher to A$16.57 billion ($12.92 billion) in the three months to April 4, with e-commerce accounting for around 8% of sales in Australia.

After four straight quarters of double-digit declines, sales at its hotels division rose 11.5% to A$390 million as capacity and social distancing rules eased.

The 97-year-old company said plans to separate its drinks and hospitality business, Endeavour Group, remains on schedule for June. ($1 = 1.2822 Australian dollars)