Woolworths Holdings Ltd (WHL) today announced results for the 52 weeks ended 25 June 2017.  Group sales increased by 3.0% to R74.3 billion, with growth in the second half impacted by increasingly difficult trading conditions in both South Africa and Australia.  Adjusted pre-tax profit was down 8.3% to R5.5 billion. Earnings per share (which includes the A$172.6 million profit on the disposal by David Jones of its Market Street property) increased by 24.8% to 566.7 cps, while Headline earnings per share declined by 7.6% to 417.7 cps.

Commenting on the results, WHL Group CEO Ian Moir said, “Despite difficult trading conditions in both South Africa and Australia, all of our businesses managed to grow ahead of the market. This reflects our strong commitment to being a highly effective, customer-focused business with a strong portfolio of brands.”

Woolworths Food, with its focus on quality and innovation, grew well above the market throughout the period with sales increasing by 8.6%. Comparable store sales grew by 4.6%. Average price movement for the year was 8.4%. Lower food inflation into the second half of the year saw the return of increasingly positive volume growth as we continued to focus on price competitiveness without compromising on the quality and innovation that our customers expect. The Food Services business showed a particularly strong performance offering our customers a unique, immersive shopping experience.

Clothing and General Merchandise sales increased by 1.4%, with price movement of 6.6%, while sales in comparable stores declined by 0.9%. Despite the difficult trading conditions, we traded ahead of most other apparel retailers and continued to build our fashion credibility with a segmented, brand-directed customer experience. We launched (&US) for the Tween demographic and further segmented our womenswear offering by rebranding our modern merchandise as EDITION. We are in the process of rolling out our new beauty offering, having signed contracts with international luxury brands such as Chanel, La Mer, Bobbi Brown, Estée Lauder and Clinique, further confirming our ambition to building a big Beauty business.

Woolworths Financial Services debtor’s book grew by 3.3% reflecting the tight credit environment and the impact of the NCAA on new and existing customer growth. The impairment rate was 6.3% (2016: 5.7%.)

David Jones sales increased by 1.0% in Australian dollar terms, with the termination of the Dick Smith electronics concession impacting growth by 1.0%. Sales in comparable stores (excluding the impact of Dick Smith) declined by 0.7%. Sales growth slowed in the second half as consumer sentiment worsened, although our share of the department store and specialty market grew marginally.

Key transformation initiatives at David Jones have progressed well, including the launch of a new Customer Relationship Management programme, new Merchandise and Inventory Management systems and the launch of the new David Jones Food offering, with the new foodhall at Bondi Junction, Sydney, positively received by customers.

Country Road Group sales increased by 5.1% in Australian dollar terms and showed a marked improvement in the second half, with newly-acquired Politix adding 3.7% to growth. Sales in comparable stores declined by 0.4%. Country Road’s above-market performance reflects the changes made to the business over the past 18 months and the ongoing improvements to ranges during the year that those changes brought about.

“Market conditions in the year ahead are likely to be constrained by the same economic and political conditions that impacted our performance during the year under review. We will also continue to see more structural change in both South Africa and Australia. However we are confident that our strategies will deliver a future-fit business capable of long term profitable growth. We expect our food and clothing businesses in both South Africa and Australia to continue to outperform their respective markets,” concludes Moir.

The Board has declared a final dividend of 313.0 cps, in line with last year.