SOUTH AFRICA – Woolworths, Australian retail chain and grocery stores owner with operations in South Africa, expects its headline earnings for the half-year to December 26, to fall by between 30% and 40%, compared to the same period in the previous year.
The slump in profit earnings is attributed to civil unrest in South Africa and lockdown restrictions in Australia.
According to the trading update, group turnover and concession sales for the 26 weeks decreased by 2.1% and by 0.3% in constant currency terms.
Its noteworthy, sales in the last six weeks of the period increased by 3.0%, and by 3.5% in constant currency terms.
“Trading momentum across all divisions except Fashion Beauty Home (FBH) improved over the last six weeks of the period supported by more targeted Black Friday promotions, positive festive season trade, and the lifting of lockdown restrictions in Australia,” the company said.
In a sign of the pressure on consumers in an economy that still bears scars from the Covid-19 outbreak, the food business, traditionally a star performer, barely grew.
Its food business in South Africa grew sales by 3.8% for the six months, accelerating its momentum to 5.8% in the last six weeks of the period.
Sales in comparable stores grew by 2.8%, with price movement of 2.6% and underlying product inflation of 3.7%.
“Sales growth should be considered in the context of the high Covid-19 base in 2020, which benefitted from increased home consumption,” Woolworths said.
On a two-year basis, sales have grown by a cumulative 15.2%, relative to the comparative 2019 period.
The food segment growth was propelled by rise in online sales which increased by 55.8%, contributing 3.1% of South African sales.
This is up from 2.3% in the prior reporting period ended June 27, 2021, supported by the expanded Click-and-Collect offering and the rollout of its on-demand delivery service, Woolies Dash.
Beefing up its delivery service, Woolworths recently embarked on a trial phase for use of electric panel vans as part of its online delivery fleet.
Undertaken in partnership with renewable vehicle company Everlectric and logistics company DSV, the initiative move is in line with Woolworth’s vision of becoming the most sustainable retailers in the world.