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%.
The group's retail space, which includes their expansion up into Africa, grew by 2.3% while the franchise conversion process is still making headway.
I must admit the franchise model can work really well but in Woolworths case I like the fact that all the stores are going to be under one group. This is because quality is absolutely integral in their model and having their reputation in other people's hands is risky.
In terms of earnings a 30%-35% increase is expected due to sales growth and an unrealised gain from mark-to-market foreign exchange contracts. The stock is trading at an all time high of R42.50. More analysis on the valuations will be done when the results come out.