Jan 17, 2019
South Africa's Woolworths hit by sluggish sales, earnings warning
Jan 17, 2019
Shares in Woolworths fell more than 8 percent on Thursday after the South African department store operator posted slower half-year sales growth and said it expected its headline earnings to drop by 5 percent in the period.
Woolworths, which owns clothing and homeware retailer Country Road, said it expects half-year headline earnings per share (HEPS) to either be flat or fall by up to 5 percent from 206.3 cents for the same period a year earlier.
It said adjusted HEPS are expected to decline between 7.5 percent and 12.5 percent from 223.4 cents.
Woolworths shares were down 9 percent to 50 rand at 0727 GMT, which would be the biggest daily fall in the stock in more than three-years if they close at this level.
The drop came after Woolworths said group sales rose by 1.9 percent in the 26 weeks ending Dec. 23, 2018, compared with a 2.5 percent increase in the 26-week period ended Dec. 24, 2017. The retailer had an additional pre-Christmas trading day in 2017, which helped boost the sales.
South African retail sales climbed 3.1 percent in November, led by household furniture and appliances, textiles, clothing and footwear and general dealers as consumers enjoyed the sales opportunities presented by Black Friday.
Woolworths food sales climbed 6.3 percent, with volume driven by low inflation higher levels of promotions and price investment. Comparable store sales increased by 4.2 percent.
Sales at the local fashion, beauty and home business declined by 2 percent, with comparable store sales down 2.4 percent due to a significantly smaller winter clearance sale in the first quarter, the group said.
The fashion, beauty and home business has been under pressure recently from constrained economic conditions and mistakes in womenswear offerings.
While sales in David Jones, which is based in Australia, inched up 1 percent, with sales performance weakening in line with the rest of the Australian retail market in the final weeks leading up to Christmas, it said.
David Jones has been going through a transformation which includes putting in place new merchandise and finance systems, new online platform and repositioning its food business and has led to significant costs and disruptions.
© Thomson Reuters 2022 All rights reserved.