Woolworths’ next big move for South Africa

 ·12 Jan 2025

The Woolworths Group is seeing strong growth in its beauty section, with the group looking to expand the business through standalone stores and a greater product offering.

Speaking with the Business Times, Woolworths Group CEO Roy Bagattini said that the beauty division experienced an unrivalled 20% growth per year, with the trend expected to continue.

Bagattini noted that the beauty business has more than doubled over the last three to four years, and the group plans to double it again in the next three to four years.

The group opened its first beauty standalone store in Waterstone Village in Cape Town last year to test the concept. It also opened a manufacturing plant in Cape Town for the group’s W Beauty products.

Although 30% of the products available are W Beauty and the remaining 70% are established beauty brands, Bagattini said that the group was not in a hurry to expand its own presence in its stores.

He said that the more that ratio shifts to its brands, the more profitable the overall beauty brand becomes.

That said, the group is comfortable with the current ratio as it needs established beauty brands to be seen as a shopping destination for beauty products.

Woolworths Beauty GM Julie Maggs previously told Business Times that the group was investigating adding nail and skin treatment to its existing beauty sections.

Bagattini noted that fashion still made up 85% of the FBH (fashion, beauty and home) revenue, but beauty is growing aggressively.

In the group’s recent trading update for the 18 weeks ended 3 November 2024, the group noted that its FBH momentum accelerated, with turnover and concession sales increasing by 3.5% and by 2.8% on a comparable-store basis.

Food is still king

Bagattini admitted that the company is far different to what it was a few years prior when the group faced a massive debt issue following its multi-billion rand acquisition of Australian clothing company David Jones.

Although the food business is still the group’s engine room, there are still many questions about its potential.

In its November trading update, the group said that its food business continued to show strong turnover and concession sales growth of 12.1% and 7.3% on a comparable-store basis, respectively.

It argued that the improved sales showed that the Woolies brand remained strong among consumers.

Excluding Absolute Pets, acquired in the fourth quarter of the previous financial year, Food sales jumped by 9.6%.

Price inflation for the period averaged 6.2%, with trading space, excluding Absolute Pets, rising by 2.0% in the prior period.

The group also saw strong online sales growth, jumping 36.9%, driven by Woolies Dash, which saw sales growth of 54.4% over the period.

Looking elsewhere, the Woolworths Financial Services book at the end of October 2024 was 3.5% below the same period in 2024 and up 2.1% excluding legal book debt sales.

That said, the annualised impairment rate for the four months ended 31 October 2024 was 5.9%, an improvement from the 7.5% seen in the prior period.

The group flagged the Australian and New Zealand business, with the Country Road Group (CRG) in trouble.

The group said that trading conditions in these countries continued to be “more challenging than anticipated, with the retail sector facing further declines in footfall, intense promotional activity, and the shift of spend towards value brands.

CRG sales dropped by 8.8% for the period and 13.8% on a comparable-store basis.

“Notwithstanding the challenging macroeconomic backdrop, the Country Road brand remains resilient, and Trenery is delivering strong topline growth, following the repositioning and rebranding of its offering,” said Woolworths

“We remain focused on improving the positioning and performance of the other brands, particularly Witchery, which are at different stages of their respective repositioning,” Woolworths said.


Read: South Africa’s fast-food giant – and it’s hungry for more

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