Depressed annual sales growth weighs on shares

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Woolworths shares fell the most in more than three months in intraday trade yesterday after the food and clothing retailer said annual sales growth slowed and bad debt charges increased.

Sales increased 12.7 percent in the 52 weeks to June 29, the company said. That was below forecasts for a 13.5 percent improvement in a survey of 13 analysts.

Woolworths sales had increased 23.2 percent in the previous fiscal year, which lasted 53 weeks.

Consumers have been struggling due to high unemployment and inflation that has increased to 6.6 percent. The Reserve Bank raised the repo rate yesterday, adding further pressure on mortgage-holders and borrowers.

Woolworths clothing sales grew 8.4 percent in South Africa, compared with 13.7 percent last year.

The revenue figures “are a bit disappointing and clothing sales are subdued”, Roger Tejwani, a retail analyst at Noah Capital Markets, said.

The shares fell as much as 3.1 percent, the most on an intraday basis since April 9, and closed 2.24 percent lower at R81.49. – Bloomberg

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