Woolworths (Woolies) surged in early trade yesterday on strong sales growth led by its food business during the half year that ended December 2020. Photograph: Courtney Africa/African News Agency(ANA)
Woolworths (Woolies) surged in early trade yesterday on strong sales growth led by its food business during the half year that ended December 2020. Photograph: Courtney Africa/African News Agency(ANA)

Food business is the star performer, leading to surging appetite for Woolies

By Dineo Faku Time of article published Jan 26, 2021

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JOHANNESBURG - WOOLWORTHS (Woolies) surged in early trade yesterday on strong sales growth led by its food business during the half year that ended December 2020.

Woolies leapt 11.09 percent to close at R44.72 on the JSE yesterday, following news of a 5.3 percent increase in group sales and growth of between 17 and 22 percent in adjusted diluted headline earnings to between 189.8 cents a share and 197.9c a share.

The retailer said that Covid-19 had added to the constrained trading environment in South African and Australian markets. “Trading conditions across the group continued to be impacted by Covid-19, with significantly reduced store footfall, particularly in larger shopping centres and CBD locations,” said the group.

Woolies said that considered actions to stimulate trade, strengthen online capabilities, manage inventory levels and execute property sales had resulted in positive cash flows and led to a continued reduction in net debt levels in both South Africa and Australia.

Woolworths Food continued to be a star performer with a 10.9 percent growth in sales, a 9.4 percent increase in comparable stores and a marginal 0.4 percent higher net space.

Woolies said that the division’s growth over the last six weeks of the

half year increased 12 percent to continue gaining the market share.

E-commerce delivered a whooping 158.5 percent growth and contributed 2.2 percent to sales with the expansion of the click-and-collect offering as well as the trial of an on-demand delivery service.

Woolies said price movements

averaged 7.1 percent, impacted by mix, while underlying product inflation hit 4.8 percent over the period.

“Price investment across key product lines remains a strategic priority and is being well received by customers,” said the group.

However, the fashion, beauty and home business recorded lower sales as consumers’ pockets remained constrained.

Woolworths Fashion, Beauty and Home (FBH) business sales declined 11.2 percent over the period, with comparable store sales 11 percent lower on a 2.4 percent price movement.

Online sales from FBH grew 118 percent, contributing 4 percent to South African sales.

David Jones (DJ), its Australian fashion business, also continued to be an albatross around its neck, exacerbated by Covid-19, as sales declined by 8.8 percent and by 10.5 percent in comparable stores.

“Excluding Victorian stores, which traded significantly down on the prior period due to the extended lockdown in the state, the balance of the DJ business, including online, grew by 5.9 percent,” said the group.

It added that online sales had increased by 55.5 percent, contributing 17.7 percent to total sales over the half.

The Country Road Group was able to deliver strong sales growth of 6.7 percent in the last six weeks of the period.

BUSINESS REPORT

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