December 8, 2021

Woolworths reveals growth plans to take on rising star Checkers

Upmarket clothes and grocery retailer Woolworths on Thursday (26 August) reported monetary outcomes for the 52 weeks ended 27 June 2021, exhibiting a 9.1% improve in turnover to R78.8 billion.

The group highlighted a ‘strong operational and financial performance’, however the continuing impacts of Covid-19 over the yr, resuming a dividend payout of 66 cents per share.

Headline earnings per share rose 212.5% to 374.4 cents per share, and adjusted diluted headline earnings per share moved up 102.9% to 341.6 cents per share.

Group turnover and concession gross sales for the 52 weeks ended 27 June 2021 elevated by 9.7% in contrast to the 52 weeks ended 28 June 2020 and by 5.9% in fixed forex phrases.

The retailer, which employs roughly 45,000 individuals, mentioned its capital expenditure is more and more shifting in the direction of ‘digital, data and online’ with spend on ‘technology and customer’ up to R691 million, from R376 million within the prior yr.

Woolworths mentioned that buying and selling situations over the monetary yr aren’t instantly comparable to the prior yr, given the in depth impression of the pandemic.

It mentioned that commerce throughout the group continued to enhance, however uncertainty and enterprise disruption exacerbated by the delay of the Covid-19 vaccine rollout, additional outbreaks and associated lockdowns throughout each South Africa and Australia.

The next elements additionally contributed to the group outcomes and monetary place:

  • The sale of the Bourke Avenue Males’s and Elizabeth Avenue properties in David Jones have been accomplished within the present yr, leading to web proceeds of A$120.0 million and A$504.4 million;
  • Covid-19 necessitated an evaluation of the carrying values of belongings, leading to impairment prices of R364 million (pre-tax); and
  • The renegotiation of assorted leases, primarily in David Jones, resulted in lease exit and modification features beneath IFRS 16 of R591 million (pre-tax).

South Africa

South Africa’s restoration from the Covid-19 pandemic was set again by the onset of the third wave in the direction of the tip of the fourth quarter, Woolworths mentioned.

The consequential stage 4 restrictions additional dampened already-weak shopper confidence, which is anticipated to restrict discretionary spending. Moreover, the latest civil unrest and associated widespread destruction of property in KwaZulu Natal and elements of Gauteng will even impression financial situations and shopper sentiment.

“We are pleased to announce that we have reopened two stores to date, with a further eight expected to be opened within the next four weeks. Our Maxmead Distribution Centre has also resumed full operations, and we are continuing to work with our insurance assessors regarding our claims,” it mentioned.

Meals

For Woolworths Meals, turnover and concession gross sales for the present yr grew by 6.9% and by 5.7% in comparable shops. The enterprise grew each market share and volumes through the interval regardless of the excessive base set within the prior yr pushed by stockpiling forward of the primary lockdown.

Woolworths mentioned that the value motion was 5.2%, with underlying product inflation of 4.9%, whereas web house elevated by 0.6%. Gross sales within the second half of the present yr grew by 3.2% and 16.9% over a two-year interval.

“We proceed to put money into worth in key product classes to enhance our worth proposition whereas remaining centered on product high quality, innovation and comfort. On-line gross sales grew by 117.9% over the present yr, contributing 2.3% to our South African Meals gross sales.

“This was further supported by the expanded Click-and-Collect offering and the rollout of our on-demand delivery service, Woolies Dash,” the group mentioned.

Style Magnificence and Dwelling

For the group’s FBH phase, complete income elevated by 3.5% and 4.2% in comparable shops, whereas gross sales within the second half of the present yr grew by 24.1% on the prior yr’s non-comparable base.

“The sales performance of the  Woolworths FBH business continues to be impacted by several factors, including the constrained environment,  the decline in demand for formalwear, as well as our initiatives to streamline our private label offerings and rationalise unproductive space,” Woolworths mentioned.

Worth motion in FBH was 7.5% and 5.3% in vogue due to the upper promotional exercise within the prior yr. On-line gross sales grew by 114.4%, contributing 4.1% to South African gross sales. The discount in web house of 6.4% has translated into improved buying and selling densities, the group mentioned.

Trying forward, Woolworths mentioned it sees further scope to develop its share of shoppers and pockets by remaining aspirational however turning into extra accessible in worth, channel and format.

The group mentioned it’ll make investments R750 million over the following two to three years, noting that its preliminary R250 million funding yields a optimistic inside charge of return (IRR).

Clients will even see an additional rollout of its fast service supply unit, Sprint. On the similar time, the group goals to expand its bodily footprint and trial new codecs, together with WCellar – its new standalone liquor retailer which launched in Could.

Shoprite not too long ago mentioned it’ll focus on rising Checkers’ place within the mid-to-upper market phase, rolling out smaller, decrease capex Shoprite supermarkets.

 


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