Major blow for Woolworths
Woolworths has had a difficult trading period in recent weeks, with the collapse of David Jones leaving questions about its Australian operations.
In the 19 weeks ended 9 November, the group’s turnover grew marginally by 0.2%, while concession sales increased by 0.1%.
The company said this reflects difficult trading conditions in both South Africa and Australia, which are weighing on consumer spending.
“The trading environment remains challenging across both South Africa and Australia, as high fuel prices, inflation and interest rates continue to constrain consumer demand and discretionary spend, with shoppers increasingly prioritising promotional offerings and essential purchases,” Woolworths said.
While the Woolworths Group saw marginal sales growth, its subsidiary, Country Road Group, recorded a 9.5% decline in sales over the 19-week period.
Woolworths attributed this decline to a higher cost of living and rising interest rates, negatively impacting consumer sentiment.
“The impact of rising interest rates and the cost of living has negatively impacted consumer sentiment, footfall and spend, with significant discounting across the retail sector,” the retailer said.
The group also raised concerns over its Australian operations, where several Country Road brands traded through David Jones.
David Jones was previously owned by Woolworths before it was sold to Anchorage Capital Partners in 2023.
On Thursday, 5 November, the Australian and New Zealand retailer collapsed and was placed under business rescue, with McGrathNicol executives appointed as voluntary administrators.
At the time, David Jones CEO Erica Berchtold said the company had a “well-developed plan on how to reset the business for the future.”
For Woolworths’ Country Road Group, the business rescue leaves questions about the trading relationship for some of its brands.
“Various Country Road Group brands trade as concessions within David Jones, which has been placed into administration and receivership,” Woolworths said.
“We are in communication with the appointed receivers and managers and are assessing what this means for the continued trading relationship.”
Slow growth in South Africa
In South Africa, Woolworths recorded stronger growth, with this segment’s turnover increasing by 1.6% over the period.
While this growth was stronger than other business sectors, the group still noted that a difficult economy had weighed on its success.
“Woolworths South Africa grew turnover and concession sales by 1.6% for the period, reflecting the impact of the constrained consumer environment,” Woolworths said.
Within its food business, turnover and concession sales grew by 1.9% and 0.1% on a comparable-store basis.
The group also noted that its acquisition of In2Foods was completed during the period, which will help streamline its operations and improve gross profit margins.
“We have completed the acquisition of in2food on 5 November 2026, following the fulfilment of the suspensive conditions,” Woolworths said.
“This acquisition will support our gross profit margin to offset the dilution from higher fuel prices and online growth.”
In its fashion, beauty, and home segment, Woolworths reported a 0.3% decline in comparable store turnover and concession sales.
Despite the decline, the group saw sales growth in its homeware sector, which it considers a key growth area.
“Homeware – a key growth priority – grew sales by 6.4%, supported by an enhanced offering,” Woolworths said.
“Beauty continued to deliver positive growth, with sales growth of 3.1%, notwithstanding increased competition in this category.”
Several other retailers have expanded in the beauty industry, including Clicks through its acquisition of a majority stake in ARC.
Pick n Pay also recently entered this market with its own-brand beauty and cosmetics products, which were integrated into its existing retail structure.
Woolworths said it would publish another trading update in January 2027, following the festive trading period.
“A further trading update will be released in mid-January 2027, following the festive season trade,” it said.
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