South African retail group Woolworths says that a constrained economy and power supply issues negatively impacted its operations in the half year period ending 29 December 2019 – but its food sales remained resilient.<\/p>\n
In a voluntary trading statement on Monday (27 January), the group warned that its headline earnings were expected to be 15% to 20% lower over the period, when compared to the comparable period before.<\/p>\n
The performance was due to the aforementioned trading conditions, and also reflected the group’s switch to IFRS 16 accounting standards, which includes the cost of leasing, often a large chunk of retailers’ operational costs, which was previously excluded.<\/p>\n
Excluding these costs would still see a decline, however, just lower at between 7.5% and 12.5% down on the previous period.<\/p>\n
“The 2019 financial year had a 53 week year, which resulted in a shift in trading weeks in 2020 compared to the prior financial year. This shift resulted in the Christmas week, including Boxing Day which is a significant trading day in Australia, falling into the first half of the current year compared to the second half of the prior year,” Woolworths noted.<\/p>\n
It expects headline earnings per share to be lower at 160.3 to 170.3 cents, versus 200.4 cents previously.<\/p>\n
Performance<\/strong><\/p>\n Woolworths Fashion, Beauty and Home sales and comparable store sales both grew by 2.2% and by 0.9% after adjusting for the shift in trading weeks. Price movement in Fashion categories was Woolworths Food sales increased by 8.1%, and by 7.8% after adjusting for the shift in trading weeks, with comparable store sales 5.4% higher and price movement of 5.1%. The business has maintained positive volume growth for the period and continues to grow market share. Net space growth was 4.0%.<\/p>\n The Woolworths Financial Services book reflected positive year-on-year growth of 8.3% as at the end of December 2019. The annualised impairment rate for the six months ended 31 December 2019 was 3.3% (six months ended 31 December 2018: 3.2%).<\/p>\n In Australia, David Jones sales for the period increased by 4.9% and were 0.5% lower after adjusting for the shift of the Christmas week. Comparable store sales (which include online) were 0.4% lower after adjusting for the trading week shift. Online sales grew by 61.8% and now comprise 10.4% of total sales. Net space increased by 1.2%.<\/p>\n Country Road Group sales declined by 2.5%, and increased by 3.3% excluding the sales impact of the Myer exit. Comparable store sales (which include online) grew by 0.1% after adjusting for the shift in trading weeks. Online sales in Australasia grew by 6.2% and now represents 21.4% of total Australasia sales.\u00a0Net space in the Country Road Group reduced by 8.1%.<\/p>\n
\n4.0% and overall net space growth was 1.2%.<\/p>\n
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