{"id":840043,"date":"2025-10-15T16:00:00","date_gmt":"2025-10-15T14:00:00","guid":{"rendered":"https:\/\/businesstech.co.za\/news\/?p=840043"},"modified":"2025-10-15T15:27:12","modified_gmt":"2025-10-15T13:27:12","slug":"good-news-about-woolworths","status":"publish","type":"post","link":"https:\/\/businesstech.co.za\/news\/finance\/840043\/good-news-about-woolworths\/","title":{"rendered":"Good news about Woolworths"},"content":{"rendered":"\n

Despite a challenging period for the Woolworths Group, PSG Wealth is optimistic about the retailer\u2019s fortunes, especially its food business. <\/p>\n\n\n\n

In the financial year ending 30 June 2025, Woolworths was impacted by the poor performances of its fashion, beauty and home (FBH) business in South Africa and the Country Road Group (CRG) in Australia. <\/p>\n\n\n\n

The group\u2019s food business was again a strong performer, and 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

The FBH business in South Africa saw turnover and sales increase by 4.7% and 5.1% on a comparable store basis, respectively. <\/p>\n\n\n\n

However, the adjusted EBITDA of R2,491 million declined 0.4% against the prior comparable period, while adjusted EBIT declined by 9.1% to R1,600 million.<\/p>\n\n\n\n

The picture was worse in Australia, with CRG facing challenges amid a restructuring. <\/p>\n\n\n\n

The restructure is reconfiguring the CRG operating model and resetting its structural economics as a standalone business.<\/p>\n\n\n\n

However, this restructuring also occurs during high interest rates, low consumer footfall, and an uncertain macro backdrop in Australia. <\/p>\n\n\n\n

Thus, CRG\u2019s sales declined by 5.4% and 6.8% on a comparable-store basis. Trading space dropped by 0.8% over the prior period as well. <\/p>\n\n\n\n

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

These issues impacted the overall group\u2019s performance, as did the prior period, which had one extra week. <\/p>\n\n\n\n

Earnings per share dropped by 5.5% to 273.4 cents per share, while headline earnings per share fell 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 before to 188 cents per share in the current year. <\/p>\n\n\n\n

PSG Wealth is still optimistic <\/h2>\n\n\n
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Despite the challenges facing the group, PSG Wealth Equity Analyst Fisokuhle Mbutho gave the stock a buy recommendation. <\/p>\n\n\n\n

Mbutho noted that the strong food performance will offset volumes in FBH and the macroeconomic challenges facing CRG. <\/p>\n\n\n\n

While the stock is currently worth around R50, PSG Wealth has given the stock an intrinsic value of R67 per share, with an upside of roughly 30%. <\/p>\n\n\n\n

Its buy recommendation is based on several factors, including the low valuation on a risk-adjusted basis, considering all three segments and the current consumer environment.<\/p>\n\n\n\n

PSG Wealth expects the food business to continue being stellar, as it will hold margins and expand volumes while increasing prices. <\/p>\n\n\n\n

Although CRG\u2019s latest results do not provide for pretty reading, Mbutho noted that the Australian company has upside potential from a recovery in consumer spending with easing inflation and decreasing interest rates. <\/p>\n\n\n\n

He added that FBH turnaround will continue, with full-priced sales being a significant portion of its revenue. <\/p>\n\n\n\n

That said, considering the upside, there are still risks due to the consumer environments in both South Africa and Australia. <\/p>\n\n\n\n

Consumers in both countries are still facing macroeconomic pressures as evident in CRG’s performance and FBH’s volume pressure.<\/p>\n\n\n\n

 That said, PSG Wealth anticipates that the strength of the Food business will offset these risks.<\/p>\n\n\n\n

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Key Financials for Woolworths<\/h2>\n\n\n
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Latest Financials<\/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 <\/td><\/td><\/tr><\/tbody><\/table><\/div><\/figure>\n\n\n\n
\n","protected":false},"excerpt":{"rendered":"

Despite a challenging 2025 financial year, PSG Wealth believes that Woolworths is undervalued. <\/p>\n","protected":false},"author":95,"featured_media":833526,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11121],"tags":[20489,11232,949],"class_list":["post-840043","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-finance","tag-country-road","tag-psg-wealth","tag-woolworths"],"_links":{"self":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/840043","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=840043"}],"version-history":[{"count":4,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/840043\/revisions"}],"predecessor-version":[{"id":840054,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/840043\/revisions\/840054"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media\/833526"}],"wp:attachment":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media?parent=840043"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/categories?post=840043"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/tags?post=840043"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}