The story of Woolworths in recent times is headlined by an expansion project in Australia that failed to meet high expectations. The performance of ailing retailer David Jones, bought almost five years ago, has been a sad chapter for shareholders, contributing to a 24% slump in the company's shares since then.
Woolworths acquired the David Jones department store chain for a steep R21bn-plus and concedes that it overpaid for it. It has struggled to reverse the impairments caused by the chain, which dealt a blow to the retailer's 2018 financial year.
While much attention has focused on turnaround efforts more than 10,000km away from its Cape Town head office, the performance of Woolworths's fashion, beauty and home business has also started to raise some worrying signs for the retailer.
Its clothing business has missed the mark for a number of seasons and, in a fiercely competitive local market that has seen the entry of international retailers such as Zara and H&M, it has been left exposed.
The David Jones collection added to local shelves was priced low but gained no favour for being one of "the most bland brands I've ever seen", according to art and fashion commentator Mary Corrigall.
"You might as well call it the 'Joe Bloggs' line. Their ranges are consistently disappointing," she said.
This week, Woolworths released a discouraging trading statement that sent its shares plummeting as much as 10.5% on the day of its release. Apart from tales of its Australian venture, its fashion, beauty and home unit reported a 2% fall in sales and a 2.4% decline in comparable store sales.
The retailer blamed a "significantly" smaller winter clearance sale in its first quarter.
As for Woolworths's Country Road and Trenery, Corrigall said the retailer is "incredibly expensive".
The lines are less risky and aren't as "fashion forward as they used to be", she said.
Woolworths food makes nearly half of its revenue, with fashion, homeware and beauty a close second.
According to Bjorn Samuels, equity analyst at Argon Asset Management, the biggest problem with the retailer's clothing offering is the shift it made to high fashion, which alienated its core customer. The introduction of the David Jones brand, among others, also sowed confusion, he said.
"Management are taking the necessary steps to rectify this, by increasing the proportion of 'basics' in the product mix and shifting away from David Jones and reintroducing Woolworths products, which have strong brand equity in SA and are associated with good quality," Samuels said.
Though the Woolworths fashion business is under pressure and its Australian woes persist, the retailer's holy grail remains its food business, which continues to outperform. The food unit increased sales 6.3%, with comparable store sales growing 4.2% on the back of retail space growth of 1.4%.
Revenue for grocery retailer Spar, in its last set of financial results, for the year ended September 30, grew 6%, boosted by its overseas business as well as its liquor and pharmaceutical units.
Market share gains and increased momentum provided a fillip to Pick n Pay's growth of 6.4% in its last interim results.
What keeps Woolworths's food division its star performer is "the defensive nature of its target market, which is the more resilient mid-upper income band consumer", said Samuels.
He said the retailer had "built a brand around quality and freshness, thus leading to the ability to charge a price premium for own-brand products. Simultaneously it has broadened its product offering by adding national branded [fast-moving consumer goods] products, to improve competitiveness and reduce their overall basket price."
Added to the retailer's poor fashion choices, it also has to weather slow economic growth and consumers being under pressure, making for a tough trading environment for retailers.
Woolworths's local rival, Truworths, also experience fashion struggles. In its trading update for the 26 weeks to end-December, it said its retail sales in Africa rose just 2%, a figure that saw its shares falling about 7%. Mr Price reported a 0.8% slide in revenue for the nine months ending December.
The Foschini Group continues to buck that trend, reporting clothing sales climbing more than 12%...