Woolworths apparel business weighs on interim earnings

Woolworths has reported a decline in earnings for the 26-weeks endedDecember as the group clothing business continues to be hit by product availability. 

Group turnover and concession sales for the current period increased by 5.7% to R40.3bn. The company said the impact of softer than expected top-line growth in its apparel businesses, coupled with pressure on gross profit margins and increased operating expenditure due to transformation initiatives, negatively affected profitability during the period, particularly in the case of Country Road Group.

Woolworths Group adjusted earnings before interest and tax declined by 13.7% to R2.8bn. Adjusted diluted headline earnings per share declined 19.4% to 169.1c, while headline earnings per share was down 24.8% to 152.8c.

Turnover from fashion, beauty and home was up 1.8% to R7.6bn, affected by a “temporary setback in product flow” arising from the implementation of new processes and systems in the distribution centre transformation initiative, which forms part of a broader value chain transformation, Woolworths said.

“Coupled with late supplier deliveries, this resulted in reduced product availability across much of our store base during the peak festive season.”

The food business delivered turnover and concession sales growth of 11.4% to R24.9bn. This was driven by “positive underlying volume growth from improved availability, ongoing innovation and enhanced value proposition, reinforcing the trust that customers continue to place in the Woolies brand”, the company said. 

“Despite the challenging context, we are confident in our ability to achieve our strategic objectives and are well-positioned to benefit from any cyclical recovery in consumer spending,” the company said.

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