Woolworths registers growth in SA food business steered by 45.4% growth in online sales

SOUTH AFRICA – South African retail giant Woolworths, has reported a marginal rise in turn-over of 1.4% in the full year ended June 2022, to R80.1 billion (US$4.6 billion), with group turnover and concession sales growing by 4.9%, and by 5.6% in constant currency terms, respectively.

During the period, online sales grew by 16.4%, contributing 12.4% to the group’s total turnover and concession sales over the year.

Its Headline earnings per share were up 6.5% to 398.9 cents per share, and adjusted diluted headline earnings per share were up 9.7% to 374.9 cents per share.

Adjusted operating profit of the company with operations in South Africa, Australia and New Zealand, declined by 3.9% to R2.9 billion, returning an operating profit margin of 7.3% for the year, compared to 7.9% in the prior year.

The Woolworths Food business in SA grew turnover and concession sales in the second half by 4.6%, with trading momentum improving throughout the period, as Covid-19 base effects eased.

Sales for the full year grew by 4.2%, and by 3.1% in comparable stores, reflecting the impact of the high base and the return to out-of-home consumption, an increasingly competitive backdrop, and low product inflation across our key categories.

Price movement averaged 3.5% for the full year, with underlying product inflation at 3.9%, reflecting continued price investment. Space grew by 1.8% relative to the prior year.

Meanwhile, online food sales increased by 45.4%, contributing 3.2% of South African sales, assisted by the further rollout of our on demand online offering.

Gross profit margin of the food segment decreased by 50bps to 24.0%, due to growth in online sales, supply chain costs and a level of price investment.

Expenses grew by 5.7%, primarily reflecting investment in initiatives, including online.

Adjusted operating profit grew by 0.4% in H2, with full year profit declining by 3.9% to R2 893 million (US$167m), returning an operating profit margin of 7.3% for the year, compared to 7.9% in the prior year.

Looking ahead, the retailer says that the global macro environment will remain volatile, with rising inflation and interest rates posing a headwind to the outlook for economic growth.

“Global supply chain uncertainties and elevated freight costs have been exacerbated by recent global events, placing significant upward pressure on raw material availability and input pricing.

“Notwithstanding this backdrop, the current momentum of our apparel businesses is expected to continue, and our Food business is expected to deliver a solid underlying performance whilst investing in key initiatives,” said Woolworths.

While releasing the financial results, the supermarket chain owner revealed that Mr Robert Collins has been appointed as an independent Non-executive Director, with effect from 1 October 2022.

Mr Collins spent over 27 years at John Lewis Partnership Plc, holding various management roles, including managing director of Waitrose until 2020.

In addition to that, the board appointed Ms Nombulelo (Pinky) Moholi as the Lead Independent Director of the Board, with effect from 7 July 2022.

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