Woolworths Holdings’ management said yesterday they were confident they could deliver against their strategies and the group was well placed to benefit from any cyclical consumer recovery.
The group yesterday reported a 15.2% decline in the dividend for the 53 weeks to June 30, to 265.5 cents per share, but the balance sheet remained robust, the group was highly cash generative, and its management said they were leveraging “our strengthened foundations to optimise our existing businesses and invest in new sources and avenues of growth”.
In the period under review, turnover and concession sales increased 4.3% to R76.4 billion. Woolworths Food delivered the standout performance with highest like-for-like sales growth in sector and double-digit profit growth. Woolworths South Africa delivered a solid result, with turnover growth of 6.7% and operating profit growth up by 5.9%, above inflation.
Group adjusted diluted headline earnings per share came to 375.4 cents, -12.2% lower than the 2023 financial year. Net borrowings increased to R5.6bn from R2.5bn in 2023, although the group remained within its gearing targeted ratio.
In Australia and New Zealand, retail trading conditions deteriorated in the second half, with consumer sentiment at near-record lows, and household savings at a 17-year low. Country Road Group sales for the 52 weeks fell by 8% and by 13.1% in comparable stores, off a high prior period base in which sales grew by 12% following the strong post-Covid pent-up demand in the first half of the prior period. Sales in the second half declined by 11.3%.
CEO Roy Bagattini said: “We continue to make significant progress against our strategic initiatives, and are on the right course to building a bigger, better, and far stronger business – fortifying our position as South Africa’s pre-eminent retailer and one of the country’s leading brands.”
During the year, the acquisition of Absolute Pets was successfully completed, and was “accretive from Day 1”. Woolworths’ on-demand delivery platform, Woolies Dash, achieved impressive sales growth of 71.2%.
The strong balance sheet was bolstered by the sale of David Jones, providing firepower to accelerate growth initiatives across number of newer categories, formats and adjacencies.
Some R10bn would be re-investing over three years in support of strategic initiatives.
Bagattini said the performance for the year was impacted by a challenging trading environment, which deteriorated throughout the year across both geographies.
“This was particularly evident in Australia, as sustained interest rate increases and higher costs of living continued to impact consumer confidence, footfall and spend. In South Africa, business operations were further disrupted by congestion at the ports for most of the period, as well as the impact of taxi strikes and avian flu in the first half of the financial year,” he said.
Woolworths Food delivered market-leading like-for-like sales growth, and turnover and concession sales grew by 9% for the 52-week comparable period and by 6.9% on a comparable store basis. Underlying product inflation for the period averaged 7.9%.
Sales at Woolworths Fashion, Beauty and Home (FBH) were impacted by the weak economy, poor product availability and increased competition from the disruptive entry of international online retailers. Turnover and concession sales declined by 0.4%, with comparable store sales decreasing by 1.3%. Sales growth in the second half fell by 2.9%, with sales volumes further impacted by the late onset of winter.
A final cash dividend of 117.5 cents was declared, 23.9% lower than the prior period’s final dividend.
BUSINESS REPORT