{"id":836695,"date":"2025-09-03T09:04:35","date_gmt":"2025-09-03T07:04:35","guid":{"rendered":"https:\/\/businesstech.co.za\/news\/?p=836695"},"modified":"2025-10-15T14:24:37","modified_gmt":"2025-10-15T12:24:37","slug":"double-blow-for-woolworths-2","status":"publish","type":"post","link":"https:\/\/businesstech.co.za\/news\/finance\/836695\/double-blow-for-woolworths-2\/","title":{"rendered":"Double-blow for Woolworths\u00a0"},"content":{"rendered":"\n

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. <\/p>\n\n\n\n

Despite having one less week than the prior period, the group\u2019s turnover and concession sales increased by 6.1% and 6.8% in the 2025 financial year, respectively.\u00a0<\/p>\n\n\n\n

This comes despite challenging macroeconomic conditions across South Africa and Australia and significant levels of uncertainty arising from global trade relations.<\/p>\n\n\n\n

The group said that Woolworths South Africa delivered a creditable performance, which was underpinned by a much-improved H2. <\/p>\n\n\n\n

Woolworths Food continued its strong momentum despite subdued consumer sentiment and discretionary spending. <\/p>\n\n\n\n

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.<\/p>\n\n\n\n

Excluding Absolute Pets, which was acquired in Q4 of the prior period, food sales jumped by 9.2%. <\/p>\n\n\n\n

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%. <\/p>\n\n\n\n

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. <\/p>\n\n\n\n

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

Trading momentum improved throughout the period, delivering H2 sales growth of 7.0%. <\/p>\n\n\n\n

This resulted from improved product availability, as product flow challenges experienced in the first half were resolved.<\/p>\n\n\n\n

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%. <\/p>\n\n\n\n

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. <\/p>\n\n\n\n

Online sales, nevertheless, increased by 22.8% and contributed 6.6% to total FBH sales.<\/p>\n\n\n\n

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%. <\/p>\n\n\n\n

FBH\u2019s 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.<\/p>\n\n\n\n

Australian headache <\/h2>\n\n\n
\n
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On top of the FBH challenges, Australia\u2019s Country Road Group (CRG) also faces challenges amidst a major restructuring. <\/p>\n\n\n\n

The restructure looks to reconfigure the CRG operating model and reset its structural economics as a standalone business.<\/p>\n\n\n\n

The transformation occurred amid high interest rates, low consumer footfall, and an uncertain macro backdrop. <\/p>\n\n\n\n

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%. <\/p>\n\n\n\n

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%.<\/p>\n\n\n\n

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. <\/p>\n\n\n\n

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. <\/p>\n\n\n\n

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

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. <\/p>\n\n\n\n

This impairment had a massive impact on the group’s earnings calculations and resulted in major declines. <\/p>\n\n\n\n

Financials <\/h2>\n\n\n
\n
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While acknowledging that the prior period had one extra week, the group\u2019s financials do not provide for pretty reading. <\/p>\n\n\n\n

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. <\/p>\n\n\n\n

The group\u2019s total dividend also dropped from 265.5 cents per share a year prior to just 188 cents per share in the current year. <\/p>\n\n\n\n

Metric<\/strong><\/td>2025<\/strong><\/td>52\/52 on LY<\/strong><\/td>52\/53 on LY<\/strong><\/td><\/tr>
Turnover and concession sales<\/td>R81.0 billion<\/td>+6.1%<\/td>+4.2%<\/td><\/tr>
Turnover<\/td>R79.5 billion<\/td>+5.8%<\/td>+3.9%<\/td><\/tr>
Profit before tax<\/td>R3.0 billion<\/td>-14.4%<\/td>-17.8%<\/td><\/tr>
Adjusted profit before tax<\/td>R3.7 billion<\/td>-18.4%<\/td>-21.0%<\/td><\/tr>
Earnings per share<\/td>273.4cps<\/td>-1.4%<\/td>-5.5%<\/td><\/tr>
Headline earnings per share<\/td>268.1cps<\/td>-23.9%<\/td>-26.4%<\/td><\/tr>
Adjusted diluted headline earnings per share<\/td>303.4cps<\/td>-19.2%<\/td>-21.6%<\/td><\/tr>
Total dividend per share<\/td>188.0cps<\/td>265.5cps LY<\/td><\/td><\/tr><\/tbody><\/table><\/div><\/figure>\n","protected":false},"excerpt":{"rendered":"

Despite its food business still being a strong performer, Woolworths continues to feel the pain from its fashion and home business in South Africa and operations in Australia. <\/p>\n","protected":false},"author":95,"featured_media":813799,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11121],"tags":[20489,21923,23527],"class_list":["post-836695","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-finance","tag-country-road","tag-david-jones","tag-wooloworths"],"_links":{"self":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/836695","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/users\/95"}],"replies":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/comments?post=836695"}],"version-history":[{"count":12,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/836695\/revisions"}],"predecessor-version":[{"id":840035,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/836695\/revisions\/840035"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media\/813799"}],"wp:attachment":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media?parent=836695"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/categories?post=836695"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/tags?post=836695"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}