Wrap Text
Unaudited Interim Results for the 26 weeks ended 24 December 2023, Cash Dividend Declaration and Changes to Board
Woolworths Holdings Limited
(Incorporated in the Republic of South Africa)
Registration number 1929/001986/06
LEI: 37890095421E07184E97
Share code: WHL
Share ISIN: ZAE000063863
Bond Company code: WHLI
('the Group', 'the Company' or 'WHL')
UNAUDITED INTERIM GROUP RESULTS FOR THE 26 WEEKS ENDED 24 DECEMBER 2023, CASH DIVIDEND
DECLARATION AND CHANGES TO THE BOARD
FINANCIAL OVERVIEW
Continuing operations Total Group
Turnover +5.1% to R37.5bn -16.7% to R37.5bn
Turnover and concession sales +5.4% to R38.1bn -23.6% to R38.1bn
Profit before tax -14.2% to R2.5bn -33.5% to R2.5bn
Adjusted profit before tax -12.1% to R2.6bn -31.8% to R2.6bn
Earnings per share -7.4% to 202.9cps -30.9% to 202.9cps
Headline earnings per share -7.5% to 203.3cps -31.0% to 203.3cps
Adjusted diluted headline earnings per share -5.6% to 209.7cps -26.3% to 209.7cps
Net borrowings (excluding lease liabilities) R4.1bn (Dec 2022: R671m)
Interim dividend per share -6.6% to 148.0cps (Dec 2022: 158.5cps)
Return on capital employed 22.3% (Dec 2022: 22.5%; 19.5% Total Group)
GROUP
The Group's results for the first half of the 2024 financial year ('current period' or 'period') are not directly
comparable to that of the prior period, given the inclusion of the David Jones contribution in the prior period.
As mentioned in our previous announcements on the Stock Exchange News Service ('SENS'), performance for
the current period has been impacted by an increasingly challenging macro-economic backdrop, given the
sustained effect of interest rate increases and higher living costs. This negatively impacted footfall, resulting in
a greater-than-expected pullback in discretionary spend in both geographies. In South Africa, our business
operations were further disrupted by higher levels of loadshedding, congestion at the ports, and the impact of
Avian flu on the availability of key food product lines. The results should also be considered in the context of
the high prior period base in which adjusted profit before tax from continuing operations grew by 32.3%.
The Group's turnover and concession sales from continuing operations (i.e. excluding David Jones, which was
disposed of in the prior year) increased by 5.4%, and by 4.4% in constant currency terms. During the last six
weeks of the period, which included trade during the key festive season, sales growth accelerated to 7.2%,
supported by our robust trade plans. Group turnover and concession sales (including the six-month
contribution of David Jones in the prior period, which is therefore non-comparable) decreased by 23.6% on the
prior period on a total basis.
Whilst the Group has maintained its stringent focus on managing inventory and containing cost, we equally
continue to invest behind our key strategic initiatives. This, coupled with the impact of subdued discretionary
spend on the profitability of our apparel businesses (particularly in Australia), resulted in earnings per share
('EPS') from continuing operations declining by 7.4% to 202.9cps, while headline EPS ('HEPS') and adjusted
diluted HEPS declined by 7.5% and 5.6% over the prior period, to 203.3cps and 209.7cps, respectively. The
share repurchases in the prior financial year have positively impacted per share measures, including dividend
per share and other capital return metrics in the current period.
Strong working capital management has also supported a healthy cash conversion ratio of 92.5%. The Group
ended the half with net borrowings of R4.1 billion, with Australia in a net cash position of A$44.0m, and WSA
well within its targeted gearing ratio.
The Group has retained the Bourke Street property, which is a flagship David Jones store in Melbourne,
Australia, as an investment asset. The property is valued at c.R3 billion and we have recognised rental income
of R113 million in the current period.
WOOLWORTHS
The economic environment in South Africa remains challenging, exacerbated by the country's energy and
logistics crises, which continue to impact both business and consumer confidence. Notwithstanding the
challenging context, the combined Southern Africa business grew operating profit by 10% on last year.
WOOLWORTHS FOOD
Our Food business delivered solid growth, re-enforcing its strength and resilience, and the trust customers
have in our brand. Turnover and concession sales grew by 8.4% and by 7.2% on a comparable store basis,
notwithstanding the impact of increased levels of loadshedding, Avian flu, and the taxi strike. Underlying
product inflation for the period averaged 9.1%, being below headline food inflation as we continue to invest in
price. Sales grew by 8.6% in the last six weeks of the period, delivering positive underlying volume growth as
product inflation eased to 7.9%. Space grew by 3.3% over the prior period, while online sales increased by
46.6%, contributing 5.1% of South African sales, driven primarily by increased coverage of our on-demand
Woolies Dash offering.
Gross profit margin increased by 80bps to 24.6%, driven by more targeted and effective promotions, as well as
value chain efficiencies, which more than offset the impact of a growing online contribution, and the ongoing
investment in price. An increase in operating expenses from new initiatives, coupled with higher cost inflation,
resulted in expense growth of 11.1%. Adjusted operating profit grew by 13.0% to R1 595 million, returning an
operating profit margin of 7.0% for the current period, compared to 6.7% in the prior period. Adjusting for the
impact of loadshedding, operating profit grew by 13.2%, returning an operating margin of 7.3%.
WOOLWORTHS FASHION, BEAUTY AND HOME ('FBH')
Fashion Beauty and Home continues to make steady progress against its strategic priorities. Sales for the 26-
week period were however impacted by poor availability, due in part to the late arrival of certain summer
ranges arising from congestion at the ports. Turnover and concession sales grew by 2.2%, with comparable
store sales increasing by 1.5%. Sales growth in the last six weeks of the period improved to 3.8%, supported by
the successful execution of our Black Friday promotions and festive season trade. Our teams remain focused on
full-price sales, which positively impacted price movement of 11.4%. Net trading space increased by 0.3%
relative to the prior period, while online sales grew by 26.9% and contributed 5.4% of South African sales.
Notwithstanding negative mix effects and inflationary supply chain costs, gross profit margin was maintained at
48.0%, attributable to the continued focus and further improvement in full-price sales and markdown metrics.
Expense growth was well managed to below inflation at 4.7%. Adjusted operating profit decreased by 5.3% to
R927 million, resulting in an operating margin of 12.2% for the current period, compared to 13.1% in the prior
period. Adjusting for the impact of loadshedding, operating profit declined by 4.3%, with an operating margin
of 12.6%.
WOOLWORTHS FINANCIAL SERVICES ('WFS')
The WFS book reflects a year-on-year increase of 4.9% to the end of December 2023, driven by growth in new
accounts and credit card advances. The annualised impairment rate for the six months ended 31 December
2023 was 6.3%, compared to 5.5% in the prior period. While this reflects the strain that consumers are under in
the current macro-economic environment, it is reducing from the peak of the last quarter of the previous
financial year. Profit after tax for the period was R122 million (excluding the R52 million IFRS 17 transition
adjustment), which is a significant improvement on the prior period profit of R60 million.
COUNTRY ROAD GROUP ('CRG')
Trading conditions in Australia and New Zealand have deteriorated further, with consumer sentiment in
Australia at near-record lows, and household savings the weakest since the GFC. In addition, the retail industry
has been disproportionately impacted by the shift in spending away from goods to services. CRG sales for the
current period declined by 5.0% and by 9.5% in comparable stores, off a high prior period base in which sales
grew by 25.5% following the strong recovery from the Covid-impacted lockdowns. Sales growth in the last six
weeks of the period was positive, at 1.3%.
The Country Road brand continues to deliver a market-leading performance across key categories. Overall
trading space increased by 6.6% during the period, supported by the ongoing expansion of our wholesale and
concession channels. The contribution from online sales increased marginally to 26.8% of total sales.
Higher promotional activity to reduce inventory levels and the impact of a weaker Australian Dollar on input
costs resulted in a 140bps decrease in the gross profit margin to 62.1%. Expenses were well controlled,
increasing by 6.4%, notwithstanding the increased trading space. Given the impact of negative operational
leverage arising from the softer top-line performance, adjusted operating profit decreased by 46.1% to A$50.2 million,
returning an operating profit margin of 8.5%, compared to 15.0% in the prior period.
OUTLOOK
The outlook for the rest of the financial year is expected to remain challenging. Whilst inflation is expected to
ease gradually, interest rates across both geographies are likely to remain elevated, placing continued pressure
on consumer disposable income. In South Africa, the ongoing energy crisis, port and infrastructure challenges
are expected to further constrain economic activity. In addition, the upcoming elections and ongoing global
geopolitical tensions increase uncertainty.
Notwithstanding this challenging macro backdrop, we remain confident in our ability to deliver against our
strategies, and are well placed to benefit from any cyclical consumer recovery. We have a robust balance sheet,
are highly cash generative, and are leveraging our strengthened foundation to optimise our existing businesses
and invest in new sources of future growth.
Any reference to future financial performance included in this announcement has not been reviewed or
reported on by the Group's external auditors and does not constitute an earnings forecast.
H Brody R Bagattini
Chairman Group Chief Executive Officer
Cape Town
27 February 2024
DIVIDEND DECLARATION
Notice is hereby given that the Board of Directors of WHL ('Board') has declared an interim gross cash dividend
per ordinary share ('dividend') of 148.0 cents (118.4 cents net of dividend withholding tax) for the 26 weeks
ended 24 December 2023, being a 6.6% decrease on the prior period's 158.5 cents, based on a payout ratio of
70% of earnings.
The dividend has been declared from reserves and therefore does not constitute a distribution of 'contributed
tax capital' as defined in the Income Tax Act, 58 of 1962. A dividend withholding tax of 20% will be applicable to
all shareholders who are not exempt.
The issued share capital at the declaration date is 988 695 949 ordinary shares. The salient dates for the
dividend will be as follows:
Last day of trade to receive a dividend Wednesday, 13 March 2024
Shares commence trading 'ex' dividend Thursday, 14 March 2024
Record date Monday, 18 March 2024
Payment date Tuesday, 19 March 2024
Share certificates may not be dematerialised or rematerialised between Thursday, 14 March 2024 and Monday,
18 March 2024, both days inclusive.
Ordinary shareholders who hold dematerialised shares will have their accounts at their CSDP or broker credited
or updated on Tuesday, 19 March 2024. Where applicable, dividends in respect of certificated shares will be
transferred electronically to shareholders' bank accounts on the payment date. Where the transfer secretaries
do not have the banking details of any certificated shareholders, the cash dividend will be held in trust by the
transfer secretaries pending receipt of the relevant certificated shareholder's banking details after which the
cash dividend will be paid via electronic transfer into the personal bank account of the certificated shareholder.
CHANGES TO THE BOARD
Shareholders and Senior Unsecured Floating Rate Noteholders are hereby advised that Hubert Brody will be
stepping down from the WHL Board with effect from the conclusion of the Annual General Meeting ("AGM") in
November 2024, having served a ten-year term on the Board.
As part of the WHL Board succession planning process, Clive Thomson has been appointed to succeed Hubert
as Chairman of the Board when Hubert steps down. Clive was appointed to the WHL Board as an Independent
Non-executive director in August 2019. He is the current chairman of the Group's Audit and Treasury
Committees and a member of the Risk, Information and Technology; Social and Ethics; Nominations; and
Remuneration and Talent Management Committees.
Clive's thorough understanding of the business gained during his time on the WHL Board, together with his
appropriate skill set, make him a highly suitable successor to Hubert. The Board wishes Clive well as he
transitions into the new role.
CA Reddiar
Group Company Secretary
Cape Town
27 February 2024
ABOUT THIS ANNOUNCEMENT
Statement and availability
The Unaudited Condensed Interim Group Results were approved by the Board on 27 February 2024, and are
available for review by accessing the following links:
https://senspdf.jse.co.za/documents/2024/JSE/ISSE/WHLE/WHLFY24.pdf
https://www.woolworthsholdings.co.za/wp-content/uploads/2024/02/whlfy24.pdf
This short-form announcement, including the constant currency and pro forma financial information, is the
responsibility of the directors. As it does not provide all the details of the Unaudited Condensed Interim Group
Results, any investment decisions by investors and/or shareholders and/or bondholders should be based on
consideration of the full announcement.
An electronic copy of the full announcement may be requested and obtained, at no charge, from the Group
Company Secretary at Governance@woolworths.co.za or the Head of Investor Relations at
InvestorRelations@woolworths.co.za.
The Analyst Presentation will be available on the website later today at the link:
https://www.woolworthsholdings.co.za/wp-content/uploads/2024/02/Analyst_Presentation.pdf
DIRECTORATE AND STATUTORY INFORMATION
Non-executive Directors
Hubert Brody (Chairman)
Nombulelo Moholi (Lead Independent Director)
Lwazi Bam
Christopher Colfer (Canadian)
Rob Collins (British)
Belinda Earl (British)
David Kneale (British)
Thembisa Skweyiya
Clive Thomson
Executive Directors
Roy Bagattini (Group Chief Executive Officer)
Zaid Manjra (Group Finance Director)
Sam Ngumeni (Group Chief Operating Officer)
Group Company Secretary
Chantel Reddiar
Debt officer
Ian Thompson
Registration number
1929/001986/06
LEI
37890095421E07184E97
Share code
WHL
Share ISIN
ZAE000063863
Bond Company code
WHLI
Registered address
Woolworths House
93 Longmarket Street
Cape Town, 8001, South Africa
PO Box 680, Cape Town 8000, South Africa
Tax number
9300/149/71/4
JSE Equity and Debt Sponsor
Investec Bank Limited
Transfer secretaries
Computershare Investor Services Proprietary Limited
28 February 2024
Date: 28-02-2024 07:05:00
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