Woolies' bountiful harvest

Woolworths' first-half profit climbed 9.3% as its food sales grew faster than the market average.

Net income at the food and clothing retailer rose to R1.65-billion in the six months to the end of December, compared with R1.5-billion in the corresponding period a year earlier, the company said yesterday.

Sales increased 46% to R28.5- billion but this included the contribution of the David Jones chain of Australian department stores acquired last year.

The David Jones acquisition was seen by the company as a step towards the creation of a southern hemisphere retail giant.

"We expect the upper-income consumer in South Africa to be relatively resilient," CEO Ian Moir said at a presentation in Cape Town.

"The first six weeks of sales are strong in both South Africa and Australia."

South African retailers struggled last year as high unemployment, prolonged strikes and high personal debt contributed to a downturn in consumer spending. Woolworths was less affected than some of its competitors because of its focus on high-end customers.

Woolworths shares gained as much as 5.3% yesterday, the biggest intra-day jump since December, and extended their gains in the late afternoon.

Food sales gained 14% in the six months, whereas clothing revenue increased by 9.4%. The latter was held back by children's wear and footwear, according to Moir, on which the company had raised prices "way too far". That had been rectified, he said.

"This is a good set of results, with all business units performing ahead of the market despite the tough trading conditions," he said.

Moir expects that disruptions caused by load-shedding by Eskom will affect sales this year.

The integration into the group of David Jones was on track, he said, and Woolworths would probably make at least A$160-million (about R1.45-billion) in savings from the tie-up within five years.

Sales at both David Jones and subsidiary Country Road would outperform the Australian market, the company said.