Woolworths falls after sales growth slows

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Published Nov 20, 2014

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Johannesburg - Woolworths fell the most in more than seven months after the South African food and clothing retailer reported slowing sales growth as the continent’s second-biggest economy falters.

The stock declined as much as 4.9 percent, the steepest intraday fall since April 9, and traded 3 percent down to 78.56 rand at 12:35 pm in Johannesburg, valuing the company at about 73 billion rand.

The retailer’s domestic food sales for the 20 weeks ended November 16 advanced 13 percent, compared with a 17 percent increase in a comparable period of 2013.

At stores open for a year or more, they rose 7.9 percent.

Clothing sales growth slowed to 8.8 percent from 11 percent a year earlier. So called same-store sales were up 3.4 percent, the Cape Town-based company said in a statement today.

South African retailers have struggled this year as strikes and unemployment of more than 25 percent constrain consumer spending.

Retailers are facing economic growth of 1.4 percent in Africa’s second-biggest economy, the slowest since 2009, while inflation is close to the upper limit of the central bank’s target range.

South Africa is the company’s biggest market.

“For the first time in many years, like-for-like food sales volume was negative and also like-for-like in clothing was negative,” Luis Colaco, an analyst at BPI Capital Africa said by phone from Cape Town.

“The positive aspect is that growth in food is still above that of its industry peers.”

Woolworths acquired David Jones, Australia’s oldest department store, in August.

Excluding the $2 billion (R22.2 billion) purchase, sales increased 12 percent for the 20 weeks from a year earlier, the company said.

The FTSE/JSE Africa General Retailers Index, retreated 1.2 percent today, led by Woolworths, furniture retailer Lewis Group Ltd. and sports store operator Holdsport Ltd. - Bloomberg News

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