Woolworths is now geared for growth and expansion as it walked out of the shadow of its David Jones mishap and as CEO Roy Bagattini said yesterday the retailer had delivered the highest annual earnings per share in the history of the group.
It said the disposal of David Jones was a major milestone in repositioning the group for growth. The sale of David Jones had now unlocked R7.7 billion in value for shareholders since 2022 and had removed R18bn in liabilities from its balance sheet. This allowed the company to reallocate both its capital and management attention towards the more value-accretive initiatives across the group’s core Woolworths and Country Road Group businesses.
Bagattini said: “We have a robust balance sheet and a simplified group structure post the sale of David Jones, and are well positioned to leverage our strengthened foundation to not only optimise and grow our businesses, but to permanently change the value creation profile of our group.”
Bagattini told shareholders the group was now entering a new growth phase.
“We are entering a new phase of our investment. This requires heavier initial capex (capital expenditure) and opex (operating expense) investment, with benefits to flow from FY25/26. It will result in a short-term drag on Food ROCE (return on capital employed), but necessary to support longer-term growth,” he said.
Delivering the results for the 52 weeks ended June 25, 2023, Bagattini warned that they were not directly comparable to the prior year due to the sale of its Australian clothing unit, David Jones, significant macro headwinds and load shedding in South Africa.
Earnings per share (EPS), which included the profit on sale of David Jones, grew by 42.2% to 551 cents per share (cps). Headline EPS increased by 29% to 514.7 cps, while adjusted diluted headline earnings per share was up 35.6% at 508.3 cps. Profit before tax rose 29.5% to R6.7bn.
The board declared a total dividend of 313.0 cents, 36.4% higher than the prior year.
Turnover and concession sales from continuing operations, excluding David Jones, increased by 10.8% for the year and by 9.3% in comparable stores.
Online sales grew by 9.3%, contributing 8.3% to the group’s turnover and concession sales from continuing operations, compared to 8.4% for the prior period.
The Food business grew turnover and concession sales by 8.5% and by 6.3% on a comparable store basis for the full year, notwithstanding load shedding. Its online food sales increased by 28.5% and contributed 3.8% of South African sales, supported by the further roll-out of its Woolies Dash on-demand offering
“Importantly, we have continued to invest not just in price, but in our overall value proposition, further strengthening the trust our customers place in our brand,” Woolworths said.
Meanwhile, Woolworths said its Fashion Beauty Home (FBH) business had fundamentally shifted its trajectory, delivering above-market sales growth, and improving profitability. Turnover and concession sales grew by 8.9% and by 8.3% on a comparable store basis for the year
“In line with our enhanced capital allocation framework, we have repurchased shares to a value of a further R2.9bn during the current year, bringing the total buy-back over the past two years to 6.6% of issued shares. FBH turnaround strategy continues to gain traction, delivering market share gains and improving profitability,” it said.
Country Road Group sales grew by 12.0% and by 12.4% in comparable stores, underpinned by strong growth from the Country Road, Politix and Witchery brands.