Woolworths profit slumps on weak womenswear, Black Friday sales
JOHANNESBURG - South African department chain Woolworths reported a 17.7% drop in half-year earnings on Thursday, dragged down by disappointing womenswear and Black Friday sales.
The company, which sells food, clothing and homeware, said headline earnings per share (HEPS), the main profit measure in South Africa, declined to 164.9 cents in the 26 weeks ended Dec. 29 from 200.4 cents a year earlier.
The decline in profit was compounded by an accounting change, Woolworths said. Excluding the impact of the accounting change, HEPS fell 10.1%.
Group turnover and concession sales rose 3.8% to 40.9 billion rand ($2.72 billion), while adjusted profit before tax dropped 12.3% to 2.4 billion rand.
“Although we had a strong first quarter in our South African fashion business, our second quarter was more challenging, with improvements in kidswear, menswear and lingerie, offset by a number of product issues in womenswear and a disappointing Black Friday sales period,” Chief Executive Officer Ian Moir said.
Woolworths tends to be more shielded from a tough economic environment at home than its peers because it targets higher-income customers.
However, mistakes in product execution in South Africa, competition from online rivals and a disruptive refurbishment at its flagship store in Australia hurt the retailer’s earnings.
“This was another tough period of trade,” Moir said.
Sales and comparable store sales in Woolworths fashion, beauty and home grew by 2.2% and by 0.9%, respectively.
Food sales held up in South Africa, with a growth of 8.1%, while upmarket department chain David Jones in Australia saw sales rise 4.9%, however, the figure was 0.5% lower when adjusted for the trading week changes.