Department store chain Woolworths Holdings (Woolies) reported a 75.1% jump in half-yearly earnings on Wednesday, but warned of a slower growth in the second half as a power crisis at home hits profitability.
Brick-and-mortar sales increased substantially in the first half ended December 25, the company said, as shoppers, particularly in Australia, returned to the aisles after prolonged pandemic lockdowns.
Woolies, which also operates in Australia under the Country Road and David Jones chains, said headline earnings per share (Heps) rose to 294.5 cents in the reporting period, up from 168.2c in the prior year.
Heps is the main profit measure in South Africa.
Group turnover and concession sales increased by 18.5% to R49.9 billion, while profit before tax jumped by 63.3% to R3.7bn.
In South Africa, which houses Woolworths’ upmarket grocery, fashion, beauty and home businesses, the retailer grappled with crippling rolling power outages, which have reduced its domestic adjusted operating profit by an estimated R15m per month.
“The majority of this incurred in our predominantly fresh food business, as a result of increased waste and diesel costs in both our supply chain and stores,” the retailer said.
The “debilitating” power crisis, constrained consumer demand and normalisation of trade in Australia were likely to result in slower profit growth from continued operations in the current second half, which began on December 26, Woolies added.
South Africa’s state electricity utility Eskom is implementing the worst rolling blackouts on record, leaving households in the dark for up to 10 hours a day, forcing retailers to crank up diesel generators for hours and putting pressure on their margins.
REUTERS