Woolworths Profit Rises Up to 35% as Food Sales Increase

  • Revenue boosted by sales from Australian chain David Jones
  • Company is South Africa's biggest retailer by market value

Woolworths Holdings Ltd., South Africa’s biggest retailer by market value, said first-half earnings climbed as much as 35 percent, as sales increased in clothes, food and at Australian chain David Jones.

Earnings excluding one-time items for the six months through Dec. 27 probably increased 25 percent to 35 percent, to as much as 2.62 rand (16 U.S. cents) a share, the Cape Town-based company said in a statement Thursday. Earnings per share will probably be 30 percent to 40 percent higher than the 1.84 rand reported a year earlier, it said.

South African retailers are showing positive momentum as a more reliable power supply keeps stores open and falling fuel prices help consumers. Shoprite Holdings Ltd. posted an 8.8 percent increase in first-half revenue, Africa’s largest grocer reported on Tuesday, while food and goods wholesaler Massmart Holdings Ltd. said on Thursday its total sales rose 8.4 percent in the year ended December.

Rand Depreciation

Woolworths also benefits from the rand’s depreciation relative to the Australian dollar, following its 2014 purchase of Sydney-based department-store operator David Jones. The rand has weakened about 20 percent against the Australian currency during the past year.

Woolworths’ first-half sales rose 17 percent, or 12 percent excluding the contribution of David Jones. A year earlier, revenue was 55 percent higher, while sales growth excluding David Jones was comparable at 13 percent. The earnings for the year-earlier period included transaction and other related costs, as well as unrealized foreign-exchange gains.

Woolworths shares slid 0.9 percent to 92.61 rand as of 9:20 a.m. in Johannesburg, extending the decline this year to 7.5 percent. The FTSE/JSE Africa General Retailers Index of 11 companies fell 1.3 percent.

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