Research archive for WHL

If you went to a Woolies during a lockdown you'd be forgiven if you thought they were thriving. Unfortunately for Woolies, most of their sales (and profits) come from clothing. This was confirmed in their latest trading update.

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.

Food and clothing retailer Woolworths is still a Vestact recommended stock in local portfolios. It has a market capitalisation of R57 billion these days, and is still in the JSE Alsi 40 index. The share price is at R54, compared to its all-time high of R103 in November 2015. In other words, we are still hanging in there, after four years of negative returns! Having said that, it's off its recent lows, of R45 a share.

Last week Woolworths reported results that were disappointing but still better than the market was expecting. The result was the share price shooting up. Here are the numbers, Turnover is up 3.9%, HEPS are down 4.6%, and the dividend has been cut by 20%. The drop in the dividend is because management has decided not to pay a dividend out of their Australian business. It has been tough out there.

On Friday Mr Price released full-year results. Here are the highlights.

Woolies released their half year numbers Thursday. The retailer reported a 2.9% drop in headline earnings on the back of bad performance by the David Jones brand in Australia which has proven to be a disaster of an acquisition to say the least.

This morning Woolies released their 26 week (six month) sales update for the period ending 23 December. As expected, the numbers were not great. High-end food can be resistant during a tough economic period but even high earners shop down when it comes to clothing.

Ian Moir and his team at Woolworths have been very good at creating a quality retail experience. It has been their niche and one of the reasons we have liked the stock. Unfortunately, a few things have not gone their way, but behind the scenes they continue to work very hard.

Vestact customers have been invested in Woolworths in their local portfolios since the middle of 2011. At the time, we felt that the clothing and food retailer was perfectly positioned to benefit from a growing middle class in South Africa, who were aspiring to shop at its upmarket stores. At the time, it traded at about R30 a share.

Yesterday Woolworths released their 6-month trading statement. Off the bat, you can see the company is in a transition phase. Locally they no longer have the luxury of taking market share from Edgars and Stuttafords, coupled with three years of poor economic growth. In Australia, the David Jones turnaround is still in full swing and still has another 18-months to go before tangible results will be seen.

Last week Woolies released their 20-week trading statement, which as expected showed that they are under pressure. Their most important division from a profit margin perspective is what used to be called 'clothing and General Merchandise' and now is called 'Woolworths Fashion, Beauty and Home'. The division declined on a like for basis by 2.4% for the period.

On Thursday morning Woolies released their 52 week or full year numbers for the period ending 25 June 2017. The stock has lost around a quarter of its value over the last 12 months, so the market knew the results were not going to show the strong growth that we had become accustomed to with Woolies. Turn over for the period was up 3%. Considering that inflation is higher than that, sales volume went backwards. HEPS were down 7.6% and then some good news, management maintained the dividend at R3.13 per share. See below how and where the company makes their money.

Woolworths reported 26 week numbers to end 25 December 2016 on Thursday, Ian Moir the CEO put on a brave face. There is no Boxing Day for Woolies in here, before you say, what is that about, the boxing day sale for David Jones in Australia is the single biggest shopping day for the business. Must be a "thing", like Black Friday. Country Road after a few rough years is starting to show "green shoots", the company has a new CEO, no prizes for guessing that it is a Scotsman, Scott Fyfe. What is interesting is that the Scott has a lot of experience in Marks & Spencer.

Woolworths released a trading update yesterday. The stock has been under exceptional pressure. Over a year it is down nearly 30 percent. Over five years the stock is up 65 percent. There is no doubt the stock price "got ahead" in the face of what was a deteriorating outlook. Harry Hindsight knows all of this, Harry can tell you almost anything that you want to know. That counts for nothing, if you own the stock, if you followed your rights a couple of years ago, it means very little.

A relatively small announcement yesterday from one of our core holdings, Woolworths. Now remember that if you have been a shareholder for more than a few seconds, you would have been involved in the rights issue in which the company issued more shares in order to part fund the purchase of department stores in Australia, they are becoming a bigger clothing business. Fashion, at the top end of what is normal. This is not a 500 Dollar pair of leather shoes kind of market, this is the market where the shopper is undoubtably rich, not at the level of extreme luxury though. And the purchase yesterday confirms and rubber stamps that line of thinking (WTF, you can't stamp a line?).