Companies / 12 July 2019, 11:30am / Sandile Mchunu
Woolworths shot up nearly 10 percent on the JSE yesterday after the retailer said its troublesome Australian subsidiary David Jones had posted its first increase in sales during the 53 weeks to the end of June.
The group said its other Australian unit, Country Road, increased sale volumes 2.3 percent during the period.
David Jones online sales rose 46.8 percent, contributing 7.7 percent to the group’s total sales of 1.5 percent in its fashion, beauty and home businesses.
Woolworths attributed the developments to its decision to focus on core ranges and basics.
“In Country Road Group, while sales growth in the second half was also impacted by the trading conditions, online sales in Australasia grew by 12.9 percent, representing 20.3 percent of sales. As the contribution from online sales increases, the reduction in unproductive space remains a priority,” the group said.
Last year, Woolworths was forced to write off A$712.5 million (R6.9 billion) from David Jones after the division was hit by the downturn in the Australian retailer sector and the poor or delayed execution of some company initiatives.
The group sacked its divisional head in May last year in a major restructuring drive that it said was meant to simplify its operations Down Under.
Woolworths yesterday admitted that trading conditions in Australia remained subdued.
“David Jones was also significantly impacted by sales disruption resulting from the Elizabeth Street store refurbishment, which is on track to be completed by the third quarter of the 2020 financial year,” the group said.
In South Africa, the food division pushed sales 5.5 percent higher in the second half of the year.
The share price climbed to a five-month high, rising to R53.54 yesterday afternoon from Wednesday’s close of R49.09.
In February, chief executive Ian Moir said Woolworths would focus on getting back to basics in South Africa, to appeal to its core customers, who were not looking for items that were either too fashionable or too youthful.
The group said local sales declined 2 percent in the first half of the year but recovered in the second half to increase by 5.5 percent, with the fashion, beauty and home segments reporting a 3.5 percent increase during the period.
Overall retail sales in South Africa increased 2.4 percent year-on-year in April, following a downwardly revised 0.1 percent increase in March.
“Food sales momentum continued into the second half, with growth of 9 percent, 8.4 percent after adjusting for the pre-Christmas trade day included in the second half, with comparable sales of 6.5 percent. This was driven by further investment in price, innovation and convenience, resulting in continued volume growth. Space growth has been limited in both businesses, as we focus on productivity and operating efficiencies,” the group said.
Woolworths closed 7.86 percent higher on the JSE yesterday at R52.95.