Major blow for Woolworths
Woolworths has warned that earnings are set to drop dramatically for the 2025 financial year amid problems facing the Australia-based Country Road Group (CRG).
In a trading statement, the group said that turnover and concession sales increased by 6.1% and by 6.8% on a constant currency basis.
This came despite challenging macroeconomic conditions across South Africa and Australia and significant anxiety caused by global trade relations.
Nevertheless, the group warned that its basic earnings per share could drop by 5% to around 263.4 to 277.3 cents per share.
The group’s headline earnings per share are set for an even worse performance, dropping by 22% and 27% to between 257.2 and 274.8.
In Australia, the group successfully disposed of a flagship investment property that houses David Jones for A$223.5 million and recognised a profit of R792 million.
However, after assessing the carrying value of certain brands’ assets within the CRG, the Woolworths Group recognised an impairment of R917 million.
This has had a highly negative impact on the group’s earnings, while the weaker-than-expected performance of CRG also impacted results.
CRG was impacted by the weaker topline environment and diluted gross profit margins, which amplified the degree of negative operational leverage in the second half of the year.
| Metric | 52 weeks to 23 June 2024 (reported) (cents) | Expected Change (%) | 52 weeks to 29 June 2025 (expected range) (cents) |
|---|---|---|---|
| Earnings per share | 277.3 | -5.0% to 0% | 263.4 to 277.3 |
| Headline Earnings per Share | 352.3 | -22.0% to -27.0% | 257.2 to 274.8 |
| Adjusted Headline Earnings per Share | 375.4 | -17.0% to -22.0% | 292.8 to 311.6 |
South Africa performance
Consumer sentiment and discretionary spending remain subdued in South Africa despite moderating inflation and interest rate cuts.
The group said that in spite of the constrained macro backdrop, Woolworths South Africa delivered strong turnover and concession sales growth of 9.4%
The group’s food business saw above-market turnover and concession sales growth of 11.0% and 7.7% on a comparable-store basis.
Price movement for the period averaged 5.3%, with positive underlying volume growth driven by growing football and the average basket size.
Food sales increased by 9.2%, excluding Absolute Pets, which was acquired in Q4 FY24.
Woolies Dash grew by 41.6% in FY25, with overall online sales increasing by 32.9% and contributing 6.6% to total Food sales.
Fashion, Beauty and Home (FBH) turnover and concession sales increased by 4.7% and 5.1% on a comparable-store basis, while trading momentum improved.
Price movement averaged 2.3% over the period, incorporating Fashion inflation of 0.4%.
“Our Beauty business continues to gain market share, delivering excellent growth of 14.7% over the period and reaffirming Woolies as the Beauty shopping destination in South Africa,” it said.
“As part of our strategy to optimise space efficiency, net trading space decreased by 2.3% relative to the whilst online sales increased by 22.8% and contributed 6.6% to total FBH sales.”
The Woolworths Financial Services book decreased by 2.7% on a year-on-year basis, but increased by 0.5% when excluding the sale of part of the legal book of R1.6 billion.
The impairment rate over the 12 months ended 30 June 2025 improved to 6.1%, compared to 7.0% in the prior period.
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