WOOLWORTHS HOLDINGS INTERIM RESULTS FOR THE 26 WEEKS ENDED 26 DECEMBER 2021

WHL’s strong balance sheet provides solid foundation for future investment, and sustainable, profitable growth as company focuses on execution of strategy.

Woolworths Holdings Limited (WHL) today announced its interim results for the 26 weeks ended 26 December 2021.

Commenting on the results, Roy Bagattini, WHL Group CEO said, “I am pleased with the progress we have made against our various strategic initiatives, particularly in the context of the ongoing effects of Covid-19. We have traded our businesses well, notwithstanding the extended lockdowns in Australia, tightly managing inventory, controlling costs, and converting sales into cash. We have reduced our debt by a further R7bn over the past year and have ended the period in a net cash position – the strongest balance sheet we have had since 2014. I’m very excited by our runway for profitable growth, and the opportunities we see to invest in our diverse businesses. We are on track to rebuild our financial credentials, drive long-term value creation, and restore our business to its rightful place in the hearts and minds of all our stakeholders.”

Group turnover decreased by 1%, and by 0.3% in constant currency terms, given the impact of lost sales arising from the prolonged lockdowns in Australia. Online sales grew by 22.4%, contributing 13.7% to the Group’s total turnover and concession sales for the period. Sales in the last six weeks of the period increased by 3.0%, and by 3.5% in constant currency terms.

WOOLWORTHS

Despite a very high Covid-19 base, the Food business grew turnover and concession sales by 3.8% for the half, and by 5.8% in the last six weeks of the period. On a two-year basis, sales have grown by a cumulative 15.2%, relative to the comparative 2019 period. Online sales increased by 55.8%, contributing 3.1% of South African sales, while space grew by 2.2% relative to the prior period. 

Gross profit margin of 24.1% was 70bps lower than the prior period, as a result of the high volumes and low waste in the base, continued price investment, and the higher online sales contribution. Expenses grew by 6.3%, due to the ongoing investment in online and digital capabilities and higher energy costs. Adjusted operating profit declined by 8.0% to R1 409 million, returning an operating margin of 7.2% for the period.

Turnover and concession sales in our Fashion Beauty and Home business grew by 4.2% and by 4.7% in comparable stores. Growth on last year was impacted by the reduced footprint, rationalising brands and ranges, the timing of summer clearance, and the underperformance in selected Womenswear categories. Online sales grew by 19.2%, contributing 4.4% of South African sales, while the ongoing execution of space reduction initiatives reduced the footprint by 6.1%, resulting in improved trading densities. With a deliberate focus on driving full-price sales, coupled with increased promotional effectiveness, gross profit margin increased by 40bps to 46.3%, notwithstanding inflationary supply chain pressures. Expenses reduced by 0.9% as we improved operating efficiencies through space reduction and other initiatives. Adjusted operating profit increased by 34.0% to R780 million, resulting in an operating margin of 11.6% for the period. The Woolworths Financial Services (WFS) net book grew by 5.3% year-on-year to the end of December 2021 (compared to a 7.8% contraction at 31 December 2020), reflecting the recovery in consumer spend. The annualised impairment rate for the six months ended 31 December 2021 improved to 4.0%, compared to 4.1% in the prior period.

DAVID JONES

David Jones’s turnover and concession sales declined by 9.2% and by 9.0% in comparable stores for the half but grew by 3.2% in the last six weeks of the period (7.7% adjusting for the shift in Boxing Day sales). In line with our previously announced space optimisation strategy, trading space reduced by a further 5.8% relative to the prior period. Online sales increased by 44.2% and contributed 28.1% to total sales during the period.

Gross profit margin increased by 20bps to 35.0%, as a result of reduced markdowns and an improved inventory position. Expenses declined by 1.8% on the prior period, as a result of store closures, space reduction and cost-out initiatives. Adjusted operating profit of A$31.0 million was 44.6% down on the prior period, returning an operating margin of 3.2%.

COUNTRY ROAD GROUP

Country Road Group sales declined by 3.1% and by 3.2% in comparable stores for the half but grew by 1.7% in the last six weeks of the period. Online sales increased by 3.6% and contributed 33.8% to total sales, while trading space reduced by 7.4% relative to the prior period.

Gross profit margin of 59.5% was 50bps lower than the prior period, mainly due to increased freight and online fulfilment costs. Expenses for the current period increased by 15.8%, as a result of the Covid-related government support and rent relief benefits in the prior year base. Adjusted operating profit declined by 48.9% to A$48.0 million for the current period, resulting in an operating margin of 9.7%.

The Board declared an interim dividend of 80.5 cents for the 26 weeks ended 26 December 2021.