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Woolworths will report a loss due to the impairment of its Australian department store chain David Jones.
Woolworths will report a loss due to the impairment of its Australian department store chain David Jones.

David Jones impairment to send Woolworths into the red

RETAILER NEWS

By Robert Laing - Jul 19th, 13:44

Woolworths will report a loss due to the impairment of its Australian department store chain David Jones. 

The retail chain issued a trading update ahead of the release of its results for its 2018 financial year on August 23 warning that it expected its loss per share to be in the range of R3.40 to R3.97.

The fall into a loss follows the R5.67 earnings per share (EPS) that Woolworths reported in its 2017 financial year.

Headline earnings per share, which exclude the A$712.5m (about R7bn) impairment of David Jones, will fall by up to 20%.

The group’s overall sales grew 1.6% in the 52 weeks to end-June 24 from the previous financial year. The trading update did not provide a rand figure, but considering Woolworths reported group sales of R74.3bn in 2017, it implies its 2018 financial year sales will be about R75.5bn.

Competitor Shoprite reported it grew turnover 3.3% to R145.6bn in its financial year to end-June, disappointing the market which sent its share down 3.73% to R210.98.

Woolworths closed 0.71% lower at R52.90 on Wednesday.

Woolworths said that "2018 has been a difficult year for the group, as we contended with extremely challenging trading conditions in SA and Australia, as well as poor product execution in some areas of womenswear".

Its South African food division grew sales by "a market-leading" 8.4%, but its fashion, beauty and home division suffered a 1.5% sales contraction.

David Jones’s annual sales fell 0.9% despite it managing a recovery in the second half during which it grew sales 2.2%.

The group’s other Australian subsidiary, Country Road, increased sales by 1.7% for the year, but comparable store sales, which exclude the menswear brand Politix acquired in November 2016, declined by 1.8%.

Both David Jones and Country Road reported strong growth in online sales. David Jones grew online sales by 21.4%, contributing 5.3% of its total sales. Country Road grew online sales 20.8%, representing 18% of its total.

The trading statement did not provide online sales figures for its South African divisions.

Business Live 

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