Woolies trading update

OK, then there was Woolies out with a trading update yesterday, for the first 20 weeks of the 2014 financial year. Mr. Market must have liked it, the stock went up 3.8 percent. Wow, that is a serious move higher. Clothing sales locally grew 11 percent, retail space expanded 4.6 percent. Food sales grew a whopping 16.7 percent, general merchandise grew by 5.5 percent. Their financial services book grew by 15.4 percent year over year, whilst the impairment rate increased to 5 percent, from 3 percent this time last year. All folks under a little pressure seemingly.

I think that the part that many got excited with was the Australian and New Zealand businesses, good progress there. All in all, a quality company that got their clothing mojo (higher margins in that business) back from their competitors. Selling to LSM groupings that are less prone to an economic downturn, plus also remember that there are more potential customers, the growth in the higher LSM groupings according to some Goldman Sachs research has been pretty eye popping over ten odd years. Paul re-tweeted this image, here it is:

Progress is too slow for everybody else unfortunately, we need more people on the right of this picture and nobody on the left on order to have a much more equal society. We are getting there, it is just taking longer, but in the end this shift is going to be very good for retailers as a whole. Woolies half year numbers are anticipated the day before Valentines day next year.