Woolworths dips on JSE as it warns of 20% earnings plunge

Woolworths on the corner of St George’s and Strand Street. Photo: Courtney Africa Independent Newspapers

Woolworths on the corner of St George’s and Strand Street. Photo: Courtney Africa Independent Newspapers

Published May 31, 2024


A 7% dip in Woolworths’ stock on the JSE yesterday characterised the South African retailer’s expected 20% plunge in full-year earnings as the consumer market remains depressed amid challenging conditions.

Woolworths’ share price dived 7% in afternoon trade on the JSE to R55.85 as investors digested its bleak earnings forecast.

The retailer cautioned yesterday that its headline earnings per share for the 53 weeks to the end of June is expected to be 20% lower compared to earnings for the year 2023 period.

This was due, in part, to the inclusion of the David Jones business, as well as the profit on disposal realised for the 2023.

Woolworths had anticipated the outlook for January to June 2024 period to remain challenging “considering the continued pressure on consumer disposable income from high interest rates and living costs” that are rising.

“Trading conditions in the second half to date have, however, proven tougher than expected for our apparel businesses, with further deterioration in footfall and discretionary spend in both geographies,” the company said.

Although Woolworths has managed to control costs, the “impact of a weaker top-line environment is resulting in continued negative operational leverage” for the group’s apparel businesses.

In Australia, Woolworths’ Country Road business is experiencing further impacts from inflated import costs due to a weaker Australian dollar, coupled with higher fixed costs.

The retailer’s grocery business is, however, showing some resilience, with strong trade and market share gains underpinned by enhanced investment into innovation and value propositions.

Woolworths expects to report its financials for the full year to end June in September.

Despite turbulence and consumer pressures, SA retail brands have remained valuable.

The 2024 Top 100 South African brands list features six retailers in the top 10 ranked South African brands.

“South African retailers remain amongst South Africa’s strongest brands, despite mixed brand value fortunes,” Brand Finance said recently.

Woolworths remained the strongest retail brand for the second year in a row, according to the ranking. – Tawanda Karombo.