Woolworths Holdings Ltd (WHL) today announced results for the 53 weeks ended 30 June 2019.
Turnover and concession sales*
+5.9% to R79.7 billion
+3.9% to R78.2 billion
Adjusted profit before tax
-0.2% to R4.8 billion
-3.7% to R4.6 billion
Headline earnings per share
-1.0% to 342.9 cps
-4.6% to 330.4 cps
Adjusted diluted headline earnings per share
+1.3% to 368.7 cps
-2.1% to 356.3 cps
Total dividend per share
-20.3% to 190.5 cps
* Excludes impact of IFRS 15
** Adjusted for impairment
For comparative reporting, the Group also presented trade for 52 weeks and the commentary below relates to the 52-week period. Group sales for 52 weeks increased by 3.9% to R78.2 billion with adjusted profit before tax down 3.7% to R4.6bn. Headline earnings per share (HEPS) decreased by 4.6% to 330.4 cps (2018: 346.3cps). Earnings per share (EPS), which includes the David Jones impairment charge of A$437.4m announced in July, decreased to -126 cps.
Commenting on the results, WHL Group CEO, Ian Moir, said, “Trading conditions remained tough in 2019 with little economic growth momentum in South Africa and Australian growth slowing to its weakest level since 2009. However, our businesses continued to trade in line with, or ahead of, the market, demonstrating our ability to deliver to the changing needs of our customers.
“We have seen a strong turnaround performance from our Woolworths Fashion, Beauty and Home business and excellent growth once again in Woolworths Food. In Australia, we experienced peak disruption from the refurbishment of the David Jones’s Elizabeth Street store and the Country Road Group performance was fair considering the trading conditions. Throughout the Group, we have adapted our strategies to the shifting retail environment.”
“Our businesses are well-positioned to see through the significant economic and structural challenges retailers are facing. We are focussed on building future-fit, customer-focused businesses with strong portfolios of brands that deliver long term value.”
Woolworths South Africa’s overall sales for the year increased by 5.8%, buoyed by an acceleration in the second half of 8.0% driven by both the Fashion and Food businesses. Online sales for the business grew by 28.7%.
Woolworths Fashion, Beauty and Home business saw a return to growth with sales increasing by 1.5%, comparable sales by 1.0% and online sales up 41%. There was a noticeable improvement in the second half (sales and comparable sales up 5.5% and 4.7% respectively) with operating profit increasing by 15.7%. This was due to more focus on core ranges and basics, backed up by improved availability. Beauty saw strong growth throughout the year and is adding to footfall through the stores.
Woolworths Food sales were up 7.7% for the year with comparable sales up 6.5%. Sales momentum continued into the second half (up 9.0%) due to further investment in price, innovation and convenience, and online sales were up 21% year on year. This was achieved despite increased competition in the market and reflects the strong positioning Woolworths Food has built in providing a combination of value and quality.
The Woolworths Financial Services debtors’ book grew by 7.4%. The impairment rate for the twelve months ended 30 June 2019 reduced to 3.7% from 4.7% the previous year.
Total sales at David Jones were 0.8% lower with comparable sales 0.1% lower. Online sales grew by 46.8% and are now contributing 7.7% of total sales. The Elizabeth Street store refurbishment, which impacted sales by approximately 3% in the second half, is on track to be completed by the end of March 2020. The new floors opened to date (Luxury Shoes, Disney Kidswear, Beauty and Accessories, and two Womenswear floors) have all traded well and ahead of expectations.
A programme of net space reduction is underway across the David Jones store portfolio to improve store productivity as online sales grow, and to build further brand exclusivity. The David Jones food offering continues to be a focus, and a pilot has been launched with BP to provide David Jones food in 10 forecourts.
COUNTRY ROAD GROUP
Country Road Group (CRG) sales increased by 0.5% with comparable sales 0.6% lower and net space reduction of 2.9%. Online sales grew a further 12.9%, now accounting for 20.3% of total sales. Country Road had a strong second half, although this was offset by fashion misses at Witchery. CRG saw a strong focus on full-priced sales through targeted, loyalty-based promotions and less generic discounting.
The Board has declared a final dividend of 98.5 cents per share to bring the total dividend for the year to 190.5 cents per share (2018: 239 cps). This is a 20% reduction in line with the decision made to withhold any Australian dividend.
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