The Australian enterprise of JSE-listed retail large Woolworths has knocked the general full-year turnover efficiency of the Cape Town-headquartered group, in accordance with its newest outcomes printed on Wednesday.
Stricter Covid-19 lockdowns within the first half of its monetary yr down below had been largely accountable, resulting in Woolworths reporting group-wide turnover and concession gross sales rising by a modest 1.4% (or 2.6% in fixed forex phrases) for the yr to 26 June 2022.
This is way decrease than lots of its locally-listed retail friends reminiscent of Shoprite, Pick n Pay, TFG and Truworths.
Despite the only digit progress in turnover, Woolworths’s South African and African operations boosted its general efficiency on the again of much less extreme Covid restrictions in these areas.
Its meals enterprise, nevertheless, noticed diminished ‘eat-from-home’ demand because the economic system opened up.
Read: Numbers present Checkers, PnP consuming Woolies Food’s lunch
The native and remainder of Africa operations collectively account for many of the group’s turnover. And that is what largely noticed the group’s complete full-year dividend however rocketing 247.7% to 229.5 cents per share (FY2021 – 60cps).
Commenting on its Australian and New Zealand operations, Woolworths famous: “As mentioned previously, trade in H1 was significantly impacted by government-enforced restrictions across the region which required the closure of stores representing more than 70% of our brick-and-mortar sales for an extended period.”
It nevertheless added: “In H2, strong consumer demand and our focus on trade resulted in a healthy rebound in sales.”
David Jones
Woolworths reported that turnover and concession gross sales at Australian-based David Jones (DJ) declined by 2.6% for the complete yr and by 2.5% in comparable shops.
In the second half of the yr DJ’s turnover and concession gross sales grew 4.3% “after the easing of lockdown restrictions”. However, that was not sufficient to see general full-year positive aspects on the unit.
Woolworths has had a tricky time working the DJ clothes chain in Australia and the enterprise took an additional hit from Covid-19 restrictions to commerce over the previous two years.
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As a solution to handle the state of affairs, Woolworths has moved to cut back its footprint within the nation, decreasing its buying and selling house by 2.6% within the newest interval as a part of its “space optimisation” technique.
“For the full year, adjusted operating profit declined by 0.6% on the prior year to A$83.7 million, returning an operating profit margin of 4.1%, compared to 4.0% in the prior year.”
“This was achieved despite Covid-19 related government support and rent concessions in the prior year base,” the group mentioned in its Sens assertion.
Key metrics
Meanwhile, the meals, clothes and homeware group declared a remaining dividend of 149 cents, a 125.8% improve on that declared within the prior yr, boosted by an improved group buying and selling efficiency within the second half.
Headline earnings per share (Heps) grew by 6.5% to 398.9 cents this era, up from 398.9 cents within the prior interval.
The easing of lockdown restrictions throughout its operations throughout the interval contributed considerably to creating a greater buying and selling atmosphere within the second half, serving to the group concentrate on executing its strategic targets, Woolworths mentioned.
Read: Woolworths annual gross sales helped by second-half enchancment
Operational assessment
A discount of buying and selling house by 4.5% of its vogue, magnificence and homeware (FBH) throughout the interval has, in accordance with the retailer, supported a double-digit improve in buying and selling densities for the section.
The FBH enterprise has seen noticeable turnover enchancment with turnover and concession gross sales rising by 6.5%, this because the transfer again to the workplace intensifies within the nation.
“Adjusted operating profit increased by 48.7% to R1 610 million, resulting in an operating margin of 11.9% for the year, compared to 8.4% in the prior year.”
The meals enterprise has maintained progress this era – even when muted compared to different grocery retailers – reporting a 4.6% rise in turnover and concession gross sales.
Woolworths says the expansion of the meals enterprise this era must be seen within the context of the return to out-of-home consumption – an more and more aggressive atmosphere – in addition to the influence of the excessive base it noticed in prior years.
Food inflation
Like its opponents, the group has additionally reported managing value will increase, conserving product inflation throughout its key classes low to defend the patron from the rising value of dwelling.
“Price movement averaged 3.5% for the full year, with underlying product inflation at 3.9%, reflecting continued price investment.”
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