Woolworths expects annual profit to slump
South African department store chain Woolworths Holdings Ltd warned on Thursday that annual profit would fall by up to 20%.
The company’s profit is hurt by “extremely” challenging trading conditions in its home market and Australia.
Woolworths, which sells groceries, food, homeware and clothes, said that headline earnings per share (HEPS) for the 52-weeks ended June 24 would fall to between 336.7 to 357.8 South African cents from 420.9 cents reported in 2017.
HEPS is the most widely watched profit gauge in South Africa and strips out certain one-off items.
A Reuters poll of 10 analysts had forecast an 8.5% drop.
Group sales for the period under review increased by 1.6% , slowing from a 3% growth in the previous year.
“2018 has been a difficult year for the group, as we contended with extremely challenging trading conditions in South Africa and Australia, as well as poor product execution in some areas of womenswear,” the company said in a statement.
At 0827 GMT, shares in Woolworths were down 0.42% to 52.68 rand.
In South Africa retailers have struggled to grow earnings amid weak economic growth, low consumer spending and clothing markdowns in particular have hit earnings.
Sales in the South Africa fashion, beauty and home division declined by 1.5%, while in David Jones and Country Road Group sales finished 0.9% lower and 1.7% higher respectively.
Australia has recorded soft retail sales growth for months amid cut-throat competition, heavy price discounts and online competition.
Woolworths added that the sales disruption from the refurbishment of the Elizabeth Street store, which houses David Jones, in Sydney will continue through to December 2019.
Woolworths is spending up to US$200 million to redevelop its flagship Elizabeth Street store in an effort to boost sales, offering 11 levels of gourmet food, dining, shoes and luxury fashion brands like Chanel.
The group’s earnings per share are expected to slide to a loss of between 340 cents to 396.7 due to a revaluation of its David Jones business in Australia.
Woolworths announced in January that it had booked a non-cash impairment charge of A$712.5 million (US$527.8 million)against the carrying value of David Jones as a result of the cyclical downturn and structural changes that have hurt performance across the Australian retail sector.
-Nampa/Reuters
Woolworths, which sells groceries, food, homeware and clothes, said that headline earnings per share (HEPS) for the 52-weeks ended June 24 would fall to between 336.7 to 357.8 South African cents from 420.9 cents reported in 2017.
HEPS is the most widely watched profit gauge in South Africa and strips out certain one-off items.
A Reuters poll of 10 analysts had forecast an 8.5% drop.
Group sales for the period under review increased by 1.6% , slowing from a 3% growth in the previous year.
“2018 has been a difficult year for the group, as we contended with extremely challenging trading conditions in South Africa and Australia, as well as poor product execution in some areas of womenswear,” the company said in a statement.
At 0827 GMT, shares in Woolworths were down 0.42% to 52.68 rand.
In South Africa retailers have struggled to grow earnings amid weak economic growth, low consumer spending and clothing markdowns in particular have hit earnings.
Sales in the South Africa fashion, beauty and home division declined by 1.5%, while in David Jones and Country Road Group sales finished 0.9% lower and 1.7% higher respectively.
Australia has recorded soft retail sales growth for months amid cut-throat competition, heavy price discounts and online competition.
Woolworths added that the sales disruption from the refurbishment of the Elizabeth Street store, which houses David Jones, in Sydney will continue through to December 2019.
Woolworths is spending up to US$200 million to redevelop its flagship Elizabeth Street store in an effort to boost sales, offering 11 levels of gourmet food, dining, shoes and luxury fashion brands like Chanel.
The group’s earnings per share are expected to slide to a loss of between 340 cents to 396.7 due to a revaluation of its David Jones business in Australia.
Woolworths announced in January that it had booked a non-cash impairment charge of A$712.5 million (US$527.8 million)against the carrying value of David Jones as a result of the cyclical downturn and structural changes that have hurt performance across the Australian retail sector.
-Nampa/Reuters
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