Woolworths’ share price surged on the JSE by nearly 7% yesterday after the retailer reporting that it expects its headline earnings per share for the first half of 2023 to increase, boosted by higher festive spending in South Africa and the return of customers to physical stores in Australia.
In intra-day trade the share hit a high of R74.79.
In its trading update for the 26 weeks ended December, 2022 released yesterday, Woolworths said it expected its headline earnings per share (Heps) for the first half of 2023 to rise by between 70% and 80%.
For the reported period, Woolworths said it saw an 18.5% (16.3% in constant currency) increase in group turnover and concession sales.
In Australia, the footfall resulted in a substantial increase in brick-and-mortar sales, with the contribution of online sales moderating to 10.9% of total turnover and concession sales, compared to 13.7% for the prior period.
Woolworths CEO Roy Bagattini said: “I am very pleased with our performance in the first half, and particularly over the festive season. The successful execution of our strategies is not only enhancing our business value today but also building strategic resilience for tomorrow.”
In South Africa, Woolworths said their Fashion Beauty Home (FBH) turnaround strategy continues to gain traction.
“Turnover and concession sales grew by 11.2% and by 11.0% on a comparable store basis, and strengthened to 12.0% in the past six weeks of the period,” it said
Woolworths said the food business grew turnover and concession sales by 7.6% and by 5.4% on a comparable store basis, with sales’ growth accelerating to 8.6% in the last six weeks of the period.
“This is notwithstanding the considerable disruption caused by load shedding, which continues to have a pronounced impact on our predominantly fresh business in terms of foregone sales, and increased waste. Additionally, we continue to incur a significant increase in diesel costs to enable trade during the extended power outages,” the retailer said.
The Woolworths Financial Services book reflects a year-on-year increase of 17.2% to the end December, 2022 driven by improved consumer spend, as well as new business and credit card advances, it said.
“The annualised impairment rate for the six months ended December 31, 2022, was 5.5% compared to 4.0% in the prior period, as the rate normalises and due to the growth in new accounts,” the group said.
On its Australian and New Zealand businesses, Woolworths said the retailer continued their positive momentum, notwithstanding the increased inflationary pressures faced by consumers during the period.
Country Road Group sales grew by 25.5% and by 26.6% in comparable stores, underpinned by strong performances from the Country Road, Politix, and Witchery brands in particular.
The last six weeks of trade, which are comparable to that of the prior period saw Country Road Group delivering strong sales growth of 8.5%.
Space was reduced by 5.5% during the period. Online sales contributed 26.1% to total sales, compared to 33.8% for the prior period.
David Jones, which the retailer will exit soon, said its turnover and concession sales increased by 31.8% and by 27.6% on a comparable store basis, with its flagship and CBD stores performing ahead of expectations.
Given the prolonged lockdowns in Australia in the prior period, its results for the first half of the 2023 financial year were not directly comparable to that of the prior period, Woolworths said.
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