Woolworths today announced results for the 26 weeks to 28 December 2014.

The results include the consolidation of David Jones and the full ownership of the Country Road Group for the first time.

Revenue increased by 55.2% to R30.3 billion and pre-tax profit by 29.8% to R2.9 billion. Basic and headline earnings grew 9.5% and 14.7% respectively, whilst adjusted headline earnings (excluding mainly acquisition-related transaction costs) increased 40.3% and by 29.3% on a per-share basis due to the increase in the number of shares in issue resulting from the Group’s R10 billion rights offer, completed in September 2014. The directors have declared an interim cash dividend of 96.5 cents per share, which is in line with the restated dividend from last year.

Commenting on the results, Chief Executive Ian Moir said:

“This is a good set of results, with all business units performing ahead of the market despite current tough trading conditions. We are progressing well with the integration of David Jones and the full ownership of the Country Road Group, which has positioned us as a leading Southern Hemisphere retailer and makes us better able to compete with the ever increasing presence of Northern hemisphere retailers.”

Clothing sales grew 9.4% in South Africa, with good performance from core menswear and womenswear categories, and softer performance from kidswear and footwear.  Total clothing and general merchandise sales grew 8.0%. Operating profit increased by 2.7%.

The Food division once again delivered an excellent performance, with sales up 14.1% and operating profit up by 24.3%.  The larger supermarket format is working well and the Food division has now delivered above market growth every month since September 2011.

WFS saw growth in the debtors book of 10.5%, with the impairment rate (including collection costs) normalising – but still at an industry leading level – at 4.8%. Profit before tax increased by 34.7%.

The results of David Jones are included for the first time. Sales rose by 2.0% in Australian dollar terms and profit of A$107 million was 10.3% higher than the comparable period.

The Country Road Group also performed well, despite a constrained retail environment, with overall sales up 9.2% in Australian dollar terms. New and larger concession pads for all four brands are currently being introduced into David Jones stores, in line with our acquisition strategy.


Outlook

We believe that economic conditions in South Africa will remain constrained, especially in the lower and middle income segments of the market where consumer debt levels are still recovering.  Sales may be further impacted by load shedding. The upper income segment in which we operate continues to show resilience.  We continue to trade ahead of the market and trading for the first six weeks of the new financial year has been positive.


In Australia there are early signs of an improved retail environment and we expect sales in both David Jones and the Country Road Group to be ahead of the market.