Woolworths profit rises as David Jones purchase lifts sales

Woolworths Holdings Ltd. said full-year profit climbed 24%, beating analyst expectations, as the company gained market share and performance improved at newly acquired Australian chain David Jones Ltd.

Net income at the seller of organic foods and international clothing brands such as Country Road rose to R3.75 billion in the year through June 28, the Cape Town-based company said in a statement on Thursday. That compares with the 3.65 billion rand estimate of six analysts surveyed by Bloomberg. Sales gained 42% to R56.5 billion, including the David Jones purchase.

Woolworths bought David Jones for about $2 billion last year to expand across the southern hemisphere. Local shopping chains have been facing nationwide unemployment of 25%, power shortages and rising inflation that stifles consumer spending. Trading for the first eight weeks of the new financial year has been “positive,” the company said.

“We believe that economic conditions in South Africa & Australia will remain constrained, especially in the lower and middle-income segments of the market,” Chief Executive Officer Ian Moir said in the statement. “The upper-income segments in which we operate continue to show some resilience.”

Food sales gained 14%, while clothing revenue increased 9.6%. Strong second-half trading at David Jones lifted that unit’s full-year sales by 6.4%.

Woolworths shares have climbed 28% this year, the best performing major retailer on the FTSE/JSE Africa General Retailers Index. The company is valued at R94.6 billion.

- Bloomberg