Woolly reasons for Woolies' Oz foray

When Woolworths pulled out of Nigeria for reasons primarily centred on logistics problems after a few short years of testing the market, there was broad support for South Africa's retail darling.

And perhaps it was a case of the targeted upper- to middle-class Nigerians feeling a closer affinity to London's Marks and Spencers than the Cape Town-based retailer.

Still, given the populace of more than 150million in Africa's largest economy, I for one felt that perhaps a thicker skin was required. But I am sure many who had forayed into that market could give reasons why getting out was the best bet.

At the time of the exit in 2013, Woolworths was operating three stores in Nigeria. Opinion differs as to exactly why it pulled the plug just a couple of years after entering the market. Everything from wrong pricing - too expensive - to high import tariffs are being blamed.

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Be that as it may, after a very short stint, the company's CEO, Ian Moir, called an end to the adventure.

And since then quite a few South African mainstays have had to shut operations in an economy that has come under immense pressure from falling oil prices.

But investors weren't going to be placated by a mere withdrawal from Nigeria without an alternative plan. With the writing on the wall of a continued slowdown in the South African economy, expansion was still on the cards.

Australia was the chosen destination, and after a bit of a messy battle with a David Jones shareholder, Woolworths eked out some parking space in the market.

Admittedly, David Jones is one of the oldest retailers in that country, much like Edgars locally. And much like the South African stalwart, it was in need of a new eye. So despite the Australian misadventures of Pick n Pay, among others, investors cheered the move on.

Just why, I was never quite sure. I could see that there was always the advantage of Moir knowing the market well, having headed Country Road for a number of years.

They weren't exactly going in there blinded by the promises made by a suit from an investment bank. And investors had seen Moir's work in the four glorious years when he was CEO of Woolworths; years in which every other retailer on the bourse had benefited from government largesse.

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But I didn't quite see it as a launchpad into Southeast Asia or anything like that. That would have made plenty of sense.

Australia was a hop, skip and jump into a very mature market of 28million people with a median age of 37. A populace a few years ahead of a South African market already feeling the strain of a different kind of shopper - one not beholden to the bricks and mortar of old.

Admittedly, it hasn't been three years since the deal was completed, so I may be jumping the gun. But it's undeniable that the investment is proving to be difficult, as shown by the results out this week.

Since the deal was completed in July 2014, the share has shed more than 10%. From its peak in November 2015, it has fallen close to 35%.

Now one can argue that it speaks to slowing growth locally. But wasn't expansion about protection?

Australia makes up 38% of Woolworths revenue, according to Bloomberg data. Where's the support?

Every company has certain criteria for investing in any market, and perhaps Nigeria failed on all counts.

But was Australia really the future when outside South Africa the retailer sources only 2.4% of its revenue from Africa?

E-mail derbyr@sundaytimes.co.za or find him on Twitter @ronderby