Sign up for our free daily newsletter
Get the latest news and some fun stuff
in your inbox every day
Yesterday Woolworths released their 26 week results ending December 2019. Total sales increased a meagre 3.8%. Due to higher operating costs, mostly in Australia, this resulted in headline earnings per share dropping 11.7% to R1.79. The below table gives you a good idea of where sales are coming from and which areas are struggling.
As you can see, the food segment in SA is still doing well. It now contributes 29% to overall group profits. Price movement was 5.1%, slightly ahead of inflation while online sales grew 22.3%. I am surprised more people do not buy groceries online. I despise grocery shopping, maybe that's why I am surprised.
Clothing is where the problems lie. In SA this only grew 2.2%. Volumes dropped, and prices increased by 4%. Online sales grew by 29.5%, which is encouraging. The presentation includes an interesting graph on market share.
In recent times Woolies peaked in August 2019 at 11.5%. They have since dropped to 9.5%. That is a combination of prices, picking the fashion trends and trying to adapt to weather patterns. All of which Woolies have struggled to get right. Let's not mention the already tough environment.
David Jones in Aus did at least increase sales by 4.9%. The Elizabeth Street refurbishment is still happening. Can you believe it? And we thought things were slow in SA? Online sales grew 61.8%, now contributing 10.4% of David Jones sales. That is good news.
As expected, this was another disapointing set of results. One feels the company could have been navigated better through a very tough environment. We know the acquisition was poor but we need to put that behind us now. The coming CEO, Roy Bagattini has a great CV. I am excited to see what some fresh ideas can do to what is a very good brand. If you hold the share, keep it. We feel the bad news is priced in and a turnaround is likely.