Woolworths sales climb almost 10% due to improved trade performance
Clothing and grocery retailer Woolworths said group sales for the year increased by 9.7% as a result of improved trade performance coupled with strong working capital management and the proceeds from property sales in Australia.
Anathi Madubela | Fin24
On Monday the group updated shareholders on its 52 weeks ended 27 June performance in which it said the proceeds from its property sales in Australia have resulted in positive cash flows and a significant reduction in net debt across the group.
Woolworths shed two properties in Australia over the year. The sale of its Elizabeth Street and Bourke Street Mens properties were sold for A$510 million (R5.6 billion) and A$121 million (R1.3 billion), respectively.
Sales for the Woolworths Food business grew by 6.9% and net space increased by 0.6%. The food business grew both market share and volumes during the period despite the high base set in the prior year driven by stockpiling ahead of the first lockdown, said the group.
Total revenue for the Woolworths Fashion, Beauty and Home (FBH) increased by 3.5%. The reduction in net space of 6.4% has translated into improved trading densities.
The sales performance of the FBH business continued to be impacted by a constrained environment, the decline in demand for formalwear, as well as initiatives to streamline the private label offerings and rationalise unproductive space, said the group.
David Jones sales increased by 2.3% with Country Road Group also delivering a sales growth of 13.4% over the year.
The group said its recovery for its SA operations has been set back by the onset of the third wave of infections occurring towards the end of the fourth quarter.
"The consequential level 4 restrictions have further dampened already-weak consumer confidence, which is expected to limit discretionary spend.
"Furthermore, the civil unrest and related widespread destruction of property will also negatively impact economic conditions, consumer sentiment and constrain our ability to trade in impacted areas," said the group in a statement.
Eleven Woolworths stores were looted and severely damaged - with nine of the eleven stores in KwaZulu-Natal and two in Gauteng. Although looters gained entry to the Woolworths Maxmead Distribution Centre in KwaZulu-Natal the infrastructure was not severely damaged and has been secured, together with other distribution centres.
The retailer said operations have resumed and it has prioritised the provision of food into KwaZulu-Natal.
The group assured shareholders that it has SA Special Risk Insurance Assurance (Sasria) cover in place in respect of material damage caused by the rioting, together with the related business interruption cover.
"We are quantifying the damage caused to our stores and... and will lodge the relevant claims timeously."