Research archive for WHL

Woolworths released their results for the 26 weeks to end 23 December 2012 this morning. There are a few moving parts in there. But some of the headline numbers look quite strong. And if you take out a few moving parts the numbers themselves look even better: "Adjusting for these items, adjusted EPS and adjusted HEPS were 35.4% and 35.9% higher respectively than the corresponding period."

Woolies released a -> Trading Update And Trading Statement this morning. And the stock has responded positively, but that is against the backdrop of a stock price that has been pummelled in recent days as the retail sector has taken pain. Byron covered that nicely yesterday in his piece on Shoprite. There are a lot of moving parts in there, because of acquisitions, the addition of Witchery and Mimco's saw New Zealand and Australian sales jump over 55 percent. But, the key part in seeing group sales increase 18 percent for the comparable 26 week period last year is that earnings have comfortably outpaced that. For the first time in my life I left a Woolies store during December because it was so busy that I just couldn't bear it. There was a queue of 15 odd trolleys just to get in.

Yesterday Woolworths came out with a strong trading update. I guess we are starting to get very used to strong updates from the likes of Woolworths and the other retailers. Nevertheless it's a good indicator that even off what is continuously becoming a higher base the growth is still strong. Group sales for the first 20 weeks of the 2013 financial year increased by 15.9%. Sales in comparable stores grew 9.9%.

There is a significant announcement from Woolies this morning, and whilst not earth shattering, it was met with a pinch of scepticism in the office. Country Road today announced that it has entered into an agreement to acquire the Witchery Group from Gresham Private Equity for A$172 million. Now Country Road of course are the Australian subsidiary of Woolies, they own 88 percent. The purchase is going to be funded part through a rights issue by Country Road, which Woolies have indicated that they will follow theirs of course, and a debt facility of 92 million Aussie Dollars. But 172 million Aussie, that is a lot of money. One Aussie Dollar is 8.66 ZAR. At the current exchange rate that is 1.489 billion Rand, or when put into perspective, 3.5 percent of their current market capitalisation, not a big deal, but sizeable nevertheless.

Woolies also released a trading update this morning, and it looks good to me, Mr. Market has the stock flat at the beginning of the day, so you could say that this was anticipated to some extent. The share price has been on an absolute tear, but so has the sector. Over the last 12 months the stock is up a whopping 70 percent. Wow. But this might seem a little light for Mr. Market as they digested it through the morning, the stock eventually took some tap. Here is the TRADING UPDATE AND TRADING STATEMENT from their website SENS portal. So expectations are for a 20 to 30 percent increase in both HEPS and EPS for the 52 week period to end June 24 2012. Remember at the half year stage, when we wrote up about Woolies: Woolies results look good, our expectations back then were for around 270 odd cents per share for the full year.

Another sterling set of numbers were released by Woolworths this morning. This was telegraphed to us in January via a trading update so the market is not surprised. But nonetheless it's always exciting to delve into the numbers.

Firstly let's look at Woolies, one of my favourite companies. Again, it is another retailer growing sales of what already seemed a high base. Sales grew 11.4% over the comparable 6 months. Not as much as Mr Price but still strong growth. Clothes were up 11.2% with a price movement of 7%. I'm a big fan of Woolworths clothing so I'm afraid I had to absorb that price increase personally. I didn't mind. Food sales grew 11.7% with a price movement of 4.8% and general merchandise grew 6.2%.

Another company out with some good looking results. This time full year results from high-end retailer Woolworths. I don't think “Woolies” needs an introduction so let's delve straight into the numbers. Turnover was up 9.4% whilst headline earnings per share grew 30.6%. Starting to notice a trend here? Companies have restructured and are better for it long term. These earnings equated to 215c per share with a final dividend of 93c being distributed. This made the overall distribution 143.5c and a yield of 4.3%.

Woolworths also showed some decent growth managing to increase sales by 9.4%. They grew their South African retail space by 7.6% and impressively grew their clothes division by 11.5%. I say impressively because this is a bit of a turnaround story plus the margins for clothing are much better than the food. Looking at the numbers we see that last year Woolworths made R1.57. Using the same method as we did with Shoprite we should expect earnings of around R1.72. The stock trades at R31.60 up 2.4% today and a PE of 18.3. The dividend cover last year was 1.5 so assuming that same ratio we should be expecting a dividend of R1.15 for the year giving the stock a yield of 3.7%. By looking at this year's interim dividend we could expect even more.