HIGHLIGHTS
Commenting on the results, WHL Group CEO, Roy Bagattini, said: “Our first half results reflect the significant progress we have made in our strategic initiatives and demonstrate that we are clearly and deliberately shifting the trajectory of our businesses. I am confident in our ability to deliver against our commitments, and deliver an improved performance for the full year, and beyond, as we continue to enhance our Group’s value creation prospects and profile.”
GROUP PERFORMANCE
The Group’s interim results reflect the ongoing progress in various strategic initiatives, with improving performance in the apparel businesses and continued above-market growth in the Food business. This is notwithstanding a constrained trading environment across both geographies. Against this backdrop, the Group delivered pleasing and above-inflation turnover and concession sales growth for the period of 5.4%, and 6.1% on a constant currency basis, with positive sales growth in all segments of the business.
Gross profit margins have, however, been under pressure, due to a combination of long-term capacity investment, targeted price investments, the stronger growth of lower margin channels and categories, and increased promotions to clear excess inventory in the apparel businesses. Profit growth was constrained by the strength of the rand, in addition to weaker currencies in some of the African markets in which we operate. Expenses were well controlled to ensure positive profit growth for the half.
Adjusted earnings before interest and tax (“aEBIT”) increased by 2.5% on the prior period, to R2.9 billion, whilst adjusted earnings before interest and tax, depreciation and amortisation (“aEBITDA”) increased by 3.2% to R4.6 billion, reflecting the impact of the investment in the Group’s various strategic and growth-enabling initiatives. On a constant currency basis, aEBIT and aEBITDA were up by 4.1% and 4.2%, respectively, with adjusted diluted earnings per share up by 3.8% to 170 cents per share, on the same basis.
Pleasingly, cash earnings improved significantly, achieving a cash conversion ratio of 110% in the half.
Disciplined capital allocation allowed the Group to repurchase 6.9m shares at a weighted average share price of R51.23 over the half, maintain a robust balance sheet, and pay an interim dividend of 118 cents per share, 10.3% higher than that of LY, with a sector-leading payout ratio.
WOOLWORTHS
Woolworths South Africa delivered above-market turnover and concession sales growth of 6.8% for the period, notwithstanding relatively subdued consumer confidence and spend, and despite the easing inflationary and interest rate environment.
WOOLWORTHS FOOD
Woolworths Food delivered another strong performance, with turnover and concession sales growth of 7.0% and 5.2% on a comparable-store basis, and consistent month-on-month market share gains. This performance is supported by the business’s unmatched expertise in food science and technology, its best‑in‑class cold chain, and its unrivalled quality, innovation, and sustainability credentials – core fundamentals that continue to set the Foods operation apart.
Revenue through Woolies Dash, the Group’s on-demand platform, grew by 23.0%, with the online channel now contributing 7.2% to SA Food sales. The business is also delivering even greater convenience to customers through “Woolies After Dark”, making Woolworths Food shoppable until midnight in more than 70 locations.
The successful expansion of the Midrand distribution centre (“DC”) is well-progressed, albeit the impact of increased depreciation from this investment, along with an increase in operating expenses from investments in growth initiatives, moderated operating profit growth to 3.5%. aEBITDA, however, increased by 7.0%, in line with topline growth. Pleasingly, return on capital continues to be best-in-class at 41.0%, notwithstanding the investments we have made in growth and growth-enabling initiatives.
WOOLWORTHS FASHION, BEAUTY AND HOME (“FBH”)
FBH achieved sector-leading total and comparable sales growth of 6.2% and 6.4%, respectively, and ongoing market share gains, supported by improved product availability. This was largely as a result of the significant investments that have been made in transformational Value Chain initiatives over the past three years, enabling multiple capability shifts across the organisation and fundamentally enhancing execution. Home and Beauty delivered strong sales growth of 14% and 8.9%, respectively, with both businesses gaining market share over the period.
Gross profit margin was impacted by the price investment in Kidswear and the clearance of excess inventory emanating from the prior period’s DC transition. Further, forex adjustments from a stronger rand had a material effect on profit growth for the period. As a result, and notwithstanding strong cost control, aEBIT increased by 1.0% to R771 million and aEBITDA increased by 4.5% to R1.2 billion. Excluding the impact of forex, aEBIT and aEBITDA would have been 4.6% and 6.7% higher than that of last year.
WOOLWORTHS FINANCIAL SERVICES (“WFS”)
WFS continues to perform well, delivering a strong underlying result. The WFS book increased by 1.8% on a year-on-year basis to the end of December 2025 and increased by 2.6% when excluding the sale of part of the legal book. This was driven by disciplined focus on quality growth through both new accounts as well as credit limit increases on existing accounts. The annualised impairment rate for the six months ending 31 December 2025 was 6.4% – the healthiest in the sector.
COUNTRY ROAD GROUP (“CRG”)
In Australia, the prolonged discounting in a high-cost inflationary environment continues to exert further pressure on retail footfall and spend. Against this backdrop, CRG delivered an improved result from that of last year, benefitting from the repositioning of the brand portfolio and the successful restructuring of CRG’s operating model which continues to be embedded in the business. Sales grew by 2.3% and by 2.5% on a comparable-store basis, but gross profit margin was under pressure due to higher promotional activity and deliberate initiatives to clear excess inventory. Expenses, however, were maintained in line with last year despite the higher cost-of-doing business, resulting in adjusted operating profit of A$14.8m being 4.2% higher than last year.
OUTLOOK
Looking ahead, while the South African macroeconomic environment is showing positive early signs of recovery, inflationary pressures in Australia and the subsequent recent interest rate hike is likely to further weaken consumer confidence in the country, tempering any recovery in Australian retail spend. Notwithstanding this context, the Group has clear strategies and a strengthened operational foundation, reinforcing confidence in the business’s ability to deliver an improved full‑year performance and sustained growth beyond that.
READ THE FULL INTERIM RESULTS VIA THE SENS ANNOUNCEMENT
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