In the next four to five years, Australia's oldest department store will be selling at least R2.5-billion worth of clothing designed and manufactured in Africa every year. Woolworths CEO Ian Moir said the opportunity to sell the group's own brands in the Australian chain David Jones, which it acquired last year, was one of the most exciting parts of the R23-billion acquisition.Woolworths brand Studio W is being rolled out across all 38 David Jones stores. It joins RE: and JTOne. In February next year, the Woolworths Classic range will also be available on Australian rails.It is still early days, but Moir said the South African brands had been very well received. About 50% of the brands are sourced locally and the other half from the Southern African Development Community.story_article_left1While the brands' push into Australia is good for the South African economy, more important for Woolworths's shareholders is that it is great for the group's bottom line. Replacing international brands with the group's own brands will significantly boost margins."As much as 98% of David Jones sales were international brands," said Sasfin analyst Alec Abraham. "That is changing because own brands means better margins."It's not just South African brands Woolworths is putting into David Jones; its Australian brands, such as Country Road, Trennery and Witchery, are also joining the mix.The change in brand profile is a key part of Woolworths's "transformation and integration" plan for David Jones. That plan aims for profit margins of more than 10% by financial 2018. This looks quite ambitious when stacked against David Jones's pre-acquisition margin of around 3% but already, after just one year under Moir's direction, there's been significant progress with a profit margin of 7.6% for the year ended June.Moir said the transformation and integration was progressing ahead of expectations despite "the Australian consumer remaining under pressure".Additional margin gains will be made by beefing up David Jones's long-neglected IT systems. Moir reckons the failure for many years to invest in systems explains why only 18% of David Jones's sales are "tracked". This compares with 77% of Country Road's sales and 74% of Woolworths's.He said tracking was very good for customers."We want to be a completely customer-centric business. You can't have too much information about customers. Through tracking we know what you do, what you buy and what you're most likely to buy."The more efficient stock management it allows is also great for sales and margins. Expect David Jones's tracking to increase to around 77% in the not-too-distant future.mini_story_image_hright1The encouraging developments in Australia helped to add shine to what was essentially a mixed-to-solid performance on the home front. Turnover was up 55% (just 12% if David Jones is excluded), pretax profit, adjusted to reflect the rights issue, advanced 20.5% and adjusted headline earnings per share grew 10.4%, or 6.7% on a fully diluted basis.The supermarket strategy had worked "remarkably well", it said, and helped the food division turn in another exceptional performance with sales up 13.5% on the back of continued market share growth.Clothing and general merchandise sales bounced back in the second half as children's wear, women's footwear and accessories sorted out their first-half problems. The performance would have been better, said Moir, but "winter didn't come quick enough", which meant May was a disaster.Woolworths Financial Services grew net interest income 15.5% and pretax profit 22% although it upped its impairment charge to 5.4% of the book from 4.8%. Moir said he did not see this ever moving above 6%.Moir described the results as "strong", particularly given that it was a transformational year for Woolworths and there were tough trading conditions to contend with.But the market didn't seem too impressed. The 6.7% increase in fully diluted earnings compared with the consensus forecast of a demanding 14.6%.crottya@sundaytimes.co.za..