South African retailer Woolworths exits Ghana in second retreat from West Africa

GHANA – Woolworths, a South African based retailer has closed down its operation in Ghana as it moves closer to consolidating its share across other African markets.

Woolworths, which retails organic foods and designer clothing, closed its two stores in Accra, Ghana’s capital and held closing down sales with 75% off the price of all items.

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This marks the second time in six years the retailer has exited a market elsewhere on the continent, after its pulled out of Nigeria in November 2013.

The retailer said that it is “experiencing healthy growth” in the majority of African markets where it continues to trade, reports Reuters.

Woolworths, which derives almost all of its income from South Africa and the David Jones department-store chain in Australia, quit Nigeria in 2013 citing high rental costs, duties and difficulties with its supply chain.

The move adds Woolworth to the list of South African retailers and restaurant chains who have had mixed fortunes in Ghana even as its economy is poised to expand at a rate of more than 6.8% for a third straight year.

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Since 2017, Truworths and Famous Brands have closed outlets while Walmart’s Massmart unit and Shoprite have expanded their footprints.

Woolworth’s profit warning

Woolworths Holdings reported that it expects earnings to fall as much as 5% this year due to further impairments on its David Jones department store business.

Woolworths, said that headline earnings per share (HEPS) for the year is expected between 345.9 to 364.1 cents, compared to 364.1 cents in the same period last year.

“The impairment reflects the economic headwinds and the accelerating structural changes affecting the Australian retail sector as well as the performance of the business, which has fallen short of expectations,” the company said.

The company also notes that the Australian retail market is in recession and this has forced the retailer to write down the value of local department store David Jones by US$437 million.

This reduced its valuation of David Jones to US$965 million. It bought the upmarket department store for US$2.1 billion in 2014.

“This write-down reflects sustained and unprecedented economic pressures and structural changes in the Australian market.

“The retail sector in Australia is currently in recession and the Australian economy has slowed to its weakest level since the global financial crisis in 2009,” a Woolworths Holdings spokesperson said.

In a trading statement ahead of its annual results expected later this month, Woolworths said its board is satisfied that the new valuation is realistic and “reflective of its prospects”.

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