Woolworths shares hit six-month high on solid sales growth
By Nick Hedley - Jul 11th, 13:57
The retailer’s food business has bolstered results amid an upturn in the fashion, beauty and home segment.
Woolworths’s shares rose 6.4% to their best level in six months after the high-end retailer said sales in the year to end-June rose 5.9% thanks to its SA food business.
“Food sales momentum continued into the second half,” the group said. Annual sales in that segment rose 9.8%, or 7.7% when accounting for the extra week included in the financial year. Selling prices were up 1.8%.
Food sales volumes were boosted by “further investment in price, innovation, and convenience”.
The domestic fashion, beauty, and home business improved sales significantly in the second half thanks to “a focus on core ranges and basics, backed by improved availability”, Woolworths said.
Group sales grew 5.9%, or 3.9% when stripping out the extra week.
Woolworths’s shares were 6.4% up at R52.21 in mid-morning trade on Thursday, the best level since mid-January.
Nic Norman-Smith, chief investment officer at Lentus Asset Management, said the sales numbers were “reasonable given the current environment”.
“The food contribution was clearly the shining light, as they maintain their dominance of the high-end food space.”
But Norman-Smith said Australian department-store chain David Jones remains a concern.
“The current valuation appears reasonable, which does lower the downside risk for shareholders despite the ongoing business issues,” he said.
Woolworths said sales growth was once again dented by David Jones, whose 1% increase in local-currency sales translated into a 0.8% decline when accounting for the extra week.
“Retail trading conditions in Australia remain challenging,” Woolworths said.
David Jones was hampered by sales disruptions linked to the refurbishment of its flagship store, which will probably be completed by the third quarter of the 2020 financial year, the group said.
Online sales at David Jones grew 46.8% and now contribute 7.7% of total sales.
In Country Road Group, online sales in Australasia grew 12.9% and now represent 20.3% of sales.
“As the contribution from online sales increases, the reduction in unproductive space remains a priority,” Woolworths said.
Barclays Research said in a report last week Australia’s retail sales remained “lacklustre” in May, with nominal retail sales at department stores falling compared to both a month and a year before.Business Live
Brands leave R34 bn in lost sales on the e-commerce table - report
22/09/2019 - 13:19
By 2021, over 20-million South Africans will shop online.
AB InBev to float Asian business in 2019’s second biggest IPO
22/09/2019 - 10:14
AB InBev will kick off a second attempt to spin off its Asian business in Hong Kong with the launch of an initial public offering (IPO) worth up to $6.6bn that could be the world’s second-largest flotation in 2019.
Samsung and KOO win big at the 21st Sunday Times Top Brands Awards
20/09/2019 - 15:12
Samsung and KOO have been announced as South Africa’s Overall Favourite Brands, winning the Grand Prix Awards in the respective Business and Consumer sectors of the 21st Sunday Times Top Brands Survey.
Retail sales remain muted with consumers under pressure
20/09/2019 - 14:31
Retail sales for July marginally declined to 2 percent year on year as sales growth continued to reflect a muted demand in South Africa, with consumers’ discretionary income under strain.
Pick n Pay rolls out R4 lifetime reusable bag made from recycled plastic bottles
20/09/2019 - 14:14
Pick n Pay is rolling out its new budget green People n Planet reusable bag nationally after a successful trial with customers earlier this year. The bag is expected to be in all stores by mid-October.