The financial performance of Woolworths' New Zealand supermarkets improved over the June year on higher sales despite a slowdown in the second half of the year.Key figures for 12 months ended June compared with previous year:Operating earnings $163m v $150mSales $8.49bn v $8.29bnReturn on funds 5.2 pct v 4.6 pctThe chain had the most improvement in the first half and said the second was more challenging, with earnings declining, which it put down to a flight to value and disruption from the rollout of a new store operating model.New Zealand managing director Sally Copland said the chain, which also includes the Fresh Choice brand, had taken steps to absorb costs and shield customers from higher prices."Earlier this year we reiterated our commitment to delivering value to kiwi customers whether through affordable everyday staples or absorbing costs to keep prices low."She said that included not passing on higher red meat costs, promotions for fresh food, and special offers in its rewards scheme."To deliver that real value for Kiwi families every week, and to have a sustainable business in a highly competitive environment, we also have to run an efficient business," Copland said.Gross margin fell on the previous year as it spent on holding and expanding its customer base, while it also had increased stock losses as it changed the way its store operated.However, the start of the new trading year has seen a lift in sales, which it said reflecting some benefit from the Disney Ooshies promotion.The New Zealand operation is worth around $3 billion and the return on the funds employed increased to 5.2 percent from 4.6 percent."Woolworths New Zealand remains a long-term, committed overseas investor in the Aotearoa retail sector, having invested $1.5 billion of capital into the New Zealand market over the past five years," Copland said.