Woolies is thriving on well-heeled customers

WOOLWORTHS has avoided the legal fray between food retailers and Massmart.

WOOLWORTHS has avoided the legal fray between food retailers and Massmart.

Instead, it is quietly continuing with its core business of attracting more upper-income consumers.

Of course, it's also implementing the acquisition of Australian retailer David Jones, for which it will raise R10-billion through a rights offer to help repay financing.

In its home market, the retailer's customers are less price sensitive than those of rivals. It has also gained from embracing the supermarket concept with its food sales up 14.8% .

Ian Moir, Woolworths CEO, said consumers saw the group in a different light. "The gap between ourselves and the market continues to widen."

Growth looks set to continue. Woolworths will grow its food retail space 9.1% this year. Its customers' greater resilience is evident from positive trading in the year to June 29. Revenue rose 12.8% to R39.9-billion. Profit jumped 20.1% to R4.4-billion. Headline earnings per share rose 9% to 365.2c. Return on equity was 46.7%.

Meryl Pick, Old Mutual Investment Group equities analyst, said Woolworths was gaining market share by convincing consumers that it was not more expensive than its competitors.