Finance

Double-blow for Woolworths 

Luke Fraser

 ·3 Sep 2025

Woolworths Food remains a strong performer for the broader Woolworths Group, but its fashion businesses in South Africa and its operations in Australia are serious problem areas. 

Despite having one less week than the prior period, the group’s turnover and concession sales increased by 6.1% and 6.8% in the 2025 financial year, respectively. 

This comes despite challenging macroeconomic conditions across South Africa and Australia and significant levels of uncertainty arising from global trade relations.

The group said that Woolworths South Africa delivered a creditable performance, which was underpinned by a much-improved H2. 

Woolworths Food continued its strong momentum despite subdued consumer sentiment and discretionary spending. 

The food business saw above-market turnover and concession sales growth of 11.0%, with sector-leading growth of 7.7% on a comparable-store basis.

Excluding Absolute Pets, which was acquired in Q4 of the prior period, food sales jumped by 9.2%. 

Trading space increased by 2.4% on the prior comparable period, while Woolies Dash saw strong sales growth of 41.6%, with online sales rising by 32.9%. 

Gross profit margin increased by 20 basis points to 24.9%, on the back of more effective promotions and volume benefits, as well as supply chain efficiencies. 

Woolworths Fashion, Beauty and Home (FBH) saw turnover and sales increase by 4.7% and 5.1% on a comparable stores basis, respectively.

Trading momentum improved throughout the period, delivering H2 sales growth of 7.0%. 

This resulted from improved product availability, as product flow challenges experienced in the first half were resolved.

Full-price sales exceeded 80% of total sales over the period, with its Beauty business, a significant focus for the group, seeing sales growth of 14.7%. 

However, as part of its strategy to optimise space efficiency, net trading space for FBH decreased by 2.3% relative to the prior comparable period.

Online sales, nevertheless, increased by 22.8% and contributed 6.6% to total FBH sales.

Promotional activity, additional supply chain challenges, and higher inventory levels led to the FBH gross profit margin declining by 120 basis points to 47.3%. 

FBH’s Adjusted EBITDA of R2,491 million marked a decline of 0.4% against the prior comparable period, while adjusted EBIT declined by 9.1% to R1,600 million.

Australian headache 

On top of the FBH challenges, Australia’s Country Road Group (CRG) also faces challenges amidst a major restructuring. 

The restructure looks to reconfigure the CRG operating model and reset its structural economics as a standalone business.

The transformation occurred amid high interest rates, low consumer footfall, and an uncertain macro backdrop. 

Within this context, sales declined by 5.4% and 6.8% on a comparable-store basis. Trading space decreased by 0.8%, while online sales contributed 28.6%. 

Higher promotional activity to manage inventory levels and a weaker Australian dollar on input costs resulted in a 390 basis point decrease in gross profit margin to 56.4%.

Although expenses dropped by 1.5% compared to the prior comparable period, the impact of the factors above amplified the degree of negative operational leverage. 

Thus, CRG reported aEBITDA of A$103.9 million, a decline of 41.1% versus the prior comparable period, and an eEBIT loss of A$18.1 million. 

The group sold its David Jones property in Melbourne, Australia, for A$223.5 million, and recognised a R792 million profit from the sale. 

However, following the reassessment of the carrying value of the assets of the underperforming brands within CRG, the carrying value of these brands was impaired by a pre-tax non-cash charge of R917 million. 

This impairment had a massive impact on the group’s earnings calculations and resulted in major declines. 

Financials 

While acknowledging that the prior period had one extra week, the group’s financials do not provide for pretty reading. 

Earnings per share declined by 5.5% to 273.4 cents per share. Headline earnings per share dropped by 26.4% to 268.1 cents. 

The group’s total dividend also dropped from 265.5 cents per share a year prior to just 188 cents per share in the current year.