Woolworths is a lot more specialised and targets clients who have more disposable income. Here is what their update had to say.
"Clothing sales in South Africa increased by 10.7% for the first 26 weeks of the 2014 financial year over the comparable 26 week period in 2013, with price movement of 5.0%. Sales in comparable stores grew by 8.8%. Retail space including stores in the rest of Africa, grew by 4.2% (net of closures) since December 2012.
Food sales grew by 15.3% with a price movement of 7.2%. Sales in comparable stores grew by 11.8%. Retail space including stores in the rest of Africa grew by 5.9% (net of closures) since December 2012.
General merchandise grew by 6.9% and by 5.1% in comparable stores."
Again these numbers look very impressive. Inflation was quite heavy as one can expect with the weaker rand but the impact is less severe on people with thicker wallets. This shows that Woolies is still getting it very right with both their clothing selection and food offerings. I almost see Woolies as a direct competitor to the likes of Famous Brands. Their readymade food options are fantastic and seem to be healthier than a standard takeaway. They are very innovative in this department.
The share was down 2.6% on the day so clearly expectations were higher. Maybe people were concerned about the 13.8% growth in the debtor's book with an annualised impairment rate of 4.3%. I wouldn't be concerned, Woolworths is still well off its highs and I would be using this as a buying opportunity.