Chief Executive Grant O'Brien said market conditions were challenging in the quarter ended March 31, particularly in general merchandise.
"Customers are responding to the targeted offers we can make," he said in a statement.
The 3.8 percent increase in like-for-like sales, or 3.1 percent rise adjusted for Easter, compared with a 2.5 percent increase in the second quarter.
Total food and liquor sales rose 5.7 percent to A$14.4 billion ($15.18 billion) as the company opened four supermarkets over the quarter, and three Dan Murphy's liquor stores, bringing the totals to 888 and 174, respectively. It plans to open a further 13 supermarkets and two Dan Murphy's in the final quarter.
Targeted offers refers to when a retailer targets customers with particular offers based on their purchasing habits.
Australian retail sales, which have been boosted by record-low interest rates, surged in February by the most in three years, data from the Australian Bureau of Statistics showed earlier this month.
Woolworths slightly upgraded its full-year guidance to 4-6 percent growth in February when it reported a 4.2 percent rise in first-half net profit to A$1.25 billion.
Woolworths and Coles, owned by Wesfarmers Ltd, together control 80 percent of Australia's supermarket sector and have been competing to lure shoppers by slashing prices of basic items such as milk and bread.
But the consumer price war has led to complaints from dairy farmers and other suppliers that the pair have misused their market power in purchasing negotiations.
The Australian Competition and Consumer Commission is investigating the issue while the main industry lobby group, the Australian Food and Grocery Council, is putting together a voluntary code of conduct.
Competition between Woolworths and Coles has intensified as the pair move into similar new areas including petrol and convenience stores, liquor and hardware.
Woolworths, which last year sold off its Dick Smith electronics chain and announced plans to spin off 69 shopping centres into a separate listed unit, plans to open five petrol and convenience stores in the final quarter, adding to 610 existing sites.
Woolworths shares were up 0.5 percent at A$34.07 in early trade, in line with the broader market.
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