By Janice Kew
(Bloomberg) — Woolworths Holdings Ltd., the South African food and clothing retailer, said first-half earnings climbed 47 percent as food sales grew and as revenue from its David Jones unit in Australia climbed.
The seller of organic foods and international clothing brands such as Country Road posted the gain even as the worst drought in more than a century pushed South African food prices higher, with December food inflation climbing to 5.8 percent. Woolworths lifted its food prices by 5.7 percent in the second half of last year.
Net income rose to 2.4 billion rand ($151 million) in the six months through Dec. 27, from 1.6 billion rand in the same period a year earlier, the Cape Town-based company said in a statement on Thursday. Sales gained 17 percent to 35.5 billion rand.
“As a result of the deterioration in the outlook for the global economy, conditions are expected to become more difficult both in South Africa and Australia,” the company said. “Increasing interest rates in South Africa will add further pressure on the local consumer.”
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Woolworths also benefits from the rand’s depreciation relative to the Australian dollar, a result of its 2014 purchase of Sydney-based department-store operator David Jones. The rand has weakened about 26 percent against the Australian currency during the past year.
Woolworths shares, which rallied 30 percent in 2015, have dropped 6.9 percent this year. The FTSE/JSE Africa General Retailers Index of 11 companies has declined 8.6 percent.
The company will pay an interim dividend of 1.33 rand, an increase of 38 percent.
