CAPE TOWN - Woolworths Holdings Ltd (WHL) the leading southern hemisphere retail group, has announced their results for the 52 weeks ended 25 June 2017.
Group sales have increased by 3.0% to R74.3 billion, this with growth in the second half impacted by increasingly difficult trading conditions in South Africa and Australia.
Adjusted pre-tax profit was down by 8.3% to R5.5 billion. The earnings per share, this including the A$172.6 million profit on the disposal by David Jones of its Market Street property, has increased by 24.8% to 566.7 cash per share (cps), while headline earnings per share declined by 7.6% to 417.7 cps.
WHL Group CEO, Ian Moir said: "Despite difficult trading conditions in both South Africa and Australia, all of our businesses managed to grow ahead of the market. This reflects our strong commitment to being a highly effective, customer-focused business with a strong portfolio of brands." Woolworths Food grew admirably above the market throughout the period with sales that have increased by 8.6%.
A statement by Woolworths stated, "Comparable store sales grew by 4.6%. Average price movement for the year was 8.4%." The lower food inflation into the second half of the year shows the return of increasingly positive volume growth as they have continued to focus on price competitiveness without compromising on their quality and innovation expected by their customers. The group's Clothing and General Merchandise sales have increased by 1.4%, with a price movement of 6.6%, while their sales in comparable stores declined by 0.9%. They have traded ahead of most apparel retailers despite difficult trading conditions and continued to build our fashion credibility with a segmented, brand-directed customer experience. "We launched (&US) for the Tween demographic and further segmented our womenswear offering by rebranding our modern merchandise as EDITION. We are in the process of rolling out our new beauty offering, having signed contracts with international luxury brands such as Chanel, La Mer, Bobbi Brown, Estée Lauder and Clinique, further confirming our ambition to building a big Beauty business," Woolworths stated.
"Woolworths Financial Services debtor's book grew by 3.3% reflecting the tight credit environment and the impact of the NCAA on new and existing customers growth. The impairment rate was 6.3% (2016: 5.7%.)" According to Woolworths, the David Jones sales increased by 1.0% in Australian dollar terms, with the termination of the Dick Smith electronics concession impacting growth by 1.0%.
Excluding the impact of Dick Smith, sales in comparable stores declined by 0.7%. However, sales growth slowed in the second half as their consumer sentiment worsened, in spite of the fact that their share of the department store and specialty market grew marginally.
"Key transformation initiatives at David Jones have progressed well, including the launch of a new Customer Relationship Management programme, new Merchandise and Inventory Management systems and the launch of the new David Jones Food offering, with the new foodhall at Bondi Junction, Sydney, positively received by customers," according to the group. The Country Road Group saw a sales increase of 5.1% in Australian dollar terms and also showed a visible improvement in the second half, this with their newly-acquired Aussie menswear brand Politix adding 3.7% to growth.
Comparable store sales declined by 0.4%. The above-market performance for Country Road reflects the changes that are made to the business over the past 18 months as well as the ongoing improvements to ranges during the year that those changes brought about.
"Market conditions in the year ahead are likely to be constrained by the same economic and political conditions that impacted our performance during the year under review. We will also continue to see a more structural change in both South Africa and Australia. However, we are confident that our strategies will deliver a future-fit business capable of long term profitable growth. We expect our food and clothing businesses in both South Africa and Australia to continue to outperform their respective markets," Moir concluded.
The board declared a final dividend of 313.0 cps in line with last year.
- BUSINESS REPORT ONLINE