JOHANNESBURG - Dual-listed South African retailer Woolworths suffered heavy impairments amounting to A$712.5million (R6.53billion) in its Australian subsidiary, David Jones, which dented its overall performance for the 26 weeks to end December.
The retailer, which is also listed on the JSE, said the impairment had resulted in a net loss of R4.86bn during the period, compared to R3.32bn profit reported last year.
Chief executive Ian Moir said a challenging market, along with some mistakes in the implementation of new systems and ranges, had an impact on its clothing businesses both in South Africa and Australia. Food operations, however, continue to perform strongly, with market leading growth in South Africa and positive results from the initial roll-out in Australia,” he said.
Woolworths said its group sales, however, had increased by 2.5percent to R38.8bn during the period, reflecting continued challenging trading conditions in both South Africa and Australia. Adjusted profit before tax of R3bn came down 8.8percent, compared to last year’s R3.27bn. Headline earnings per share (Heps) and adjusted diluted Heps, which excludes the the David Jones impairment as well as last year’s A$172.6m on profit on the sale of the David Jones Market Street property, decreased by 15percent and 8.8percent respectively.
The group said earnings per share, which included both the impairment charge and last year’s property sale, had decreased by 246.6percent.
Despite the disappointment in Australia, Moir said the group was showing some recovery signs, with political change in South Africa expected to lead to increased consumer confidence.
“In Australia, many of the transformation initiatives at David Jones are moving towards completion and the Country Road Group remains resilient and increasingly profitable in a tough market. We believe we have the right strategies in place to build on these improved conditions,” he said.
The group declared an interim dividend of 108.5cents a share, down from 133c compared to last year.
Woolworths shares inched 1.85percent higher on the JSE yesterday to close at R65.40.