Woolworths cuts final dividend by a quarter as CEO moves to Australia
By Nick Hedley - Aug 29th, 09:13
Woolworths has cut its final dividend to shareholders by a quarter after a write-down against troubled Australian chain David Jones dragged the high-end retailer to another annual loss.
Woolworths recently cut the valuation of David Jones by another A$437.4m (R4.5bn), meaning the department-store chain is now worth less than half of what the company paid for it in 2014.
“The impairment reflects the economic headwinds and the accelerating structural changes affecting the Australian retail sector as well as the performance of the business, which has fallen short of expectations,” Woolworths said.
Turnover and concession sales at David Jones declined by 0.8% in the year to end-June, with operating profit falling to A$37m, Woolworths said.
Because of the impairment against David Jones, Woolworths reported a loss after tax of R1.1bn for the 53 weeks to end-June. That compares to a net loss of R3.5bn the prior year when impairments were higher.
Woolworths, which bases dividends solely on the performance of its SA business, said it would pay a final gross dividend of 98.5c a share for the year, a 24.5% drop. That brings the total dividend for the year to 190.5c, a 20.3% decline.
Woolworths said group CEO Ian Moir, who declared in 2014 that the David Jones takeover would create a “leading southern hemisphere retailer”, had been asked by the board to spend “significantly more time in Australia”.
He would oversee the David Jones turnaround in the capacity of acting CEO of that business. “Accordingly, Ian will now be primarily based in Australia ... His group responsibilities will continue.”
Woolworths said its SA business improved in the second half of the year. And while consumer spending would remain constrained, the company’s domestic food business was likely “to continue to trade ahead of the market” and the fashion, beauty, and home unit would “continue its turnaround”.
“In Australia, we believe the retail market will continue to be tough with heavy discounting and promotional activity.”Business Live
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