STORE: Woolworths in Adderley Street, Cape Town.
STORE: Woolworths in Adderley Street, Cape Town.

Woolworths receives several offers for remaining Australian David Jones properties

By Reuters Time of article published Sep 17, 2020

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JOHANNESBURG - South African retailer Woolworths Holdings has received several non-binding offers for its remaining Australian David Jones properties, it said on Thursday as it reported a 65% slump in annual earnings.

The fashion and food retailer's new chief executive, Roy Bagattini, announced a review of its Australasian real estate assets in May as it battled the fallout from the COVID-19 pandemic, in a process that would include restructuring borrowings.

The company said on Thursday the non-binding offers were for the potential sale and leaseback of the real estate of its struggling David Jones department chain.

"Although some progress has been made, our David Jones business has simply not transitioned fast enough," Bagattini told analysts during a results presentation.

Woolworths said discussions were also progressing with the Australasian landlords in its David Jones portfolio on rent abatements and reductions in floor space.

The group announced on Thursday that it was also reviewing the strategy and execution of its struggling South African fashion, beauty and home business, with hopes in "fixing and repositioning" a division in which fashion "mistakes" have been occurring in the past two years.

Woolworths, which operates as Woolworths in Africa and David Jones and Country Road in Australasia, said the pandemic's toll on its overall business had deepened in the second half of its financial year, which ended on June 28. This was due to the temporary closure of most of its non-food stores as a result of lockdowns, coupled with a decline in foot traffic.

However, the easing of restrictions from the beginning of May resulted in some recovery in the last nine weeks of the half. Online sales across all its businesses also grew significantly and offset some loss of trade.

But this was not enough to prevent annual group sales dipping 0.1% to 78.3 billion rand, on a 52-week comparable basis. Sales declined by 1.1% in constant currency terms.

While it benefited from a 10.7 % rise in food sales in South Africa as consumers rushed to stock up on goods, this was accompanied by a similar decline fashion, beauty and home.

It also saw sales slump in Country Road and David Jones.

Its headline earnings per share (HEPS), the main profit measure in South Africa, was within previous guidance, falling 65.1% to 119.8 cents from 342.9 cents a year earlier, with an increased tax rate and new accounting changes also impacting it. Adjusted profit before tax fell 46%.

REUTERS

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