Woolworths’ profit up as shoppers keep spending

Well-heeled consumers resilient to economic pressure helped SA retailer Woolworths boost food and clothing sales.

Johannesburg - Woolworths Holdings reported full-year profit that beat analyst estimates after food and clothing sales rose, as the South African retailer benefited from a more “resilient” higher-earning customer base.

Read also: Woolworths sees tough year in SA

Diluted headline earnings per share, which exclude one-time items, rose 8.9 percent to R4.53 in the year ending June 26, the Cape Town-based company said in a statement on Thursday. That compared with the R4.45 average estimate of six analysts. Sales rose 16 percent to R72.1 billion ($5 billion).

Woolworths follows Shoprite Holdings as South African retailers reporting increased sales and profit this week, even as slowing economic growth weakens consumer confidence in their home market. Woolworths also benefited from increased revenue in Australia, where it acquired Sydney-based department-store operator David Jones in 2014.

“Our mid-to-upper income customers are resilient and our combined group presence continues to present us with opportunities to grow market share and drive profitability in both sub-Saharan Africa and Australasia,” the company said. However, “the South African customer continues to be under pressure, and the Australian trading environment continues to be tough”.

The retailer is also seeing increased competition in both South Africa and Australia with the arrival of northern hemisphere rivals, the company said.

Woolworths raised the total dividend by 27 percent to R3.13 per share.

The shares have declined 14 percent this year, the third-worst performer among 11 companies in the FTSE/JSE Africa General Retailers Index. The retailer has a market value of R89 billion.

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