The David Jones affect: Woolies sees surge in first half profit, up 35%
JOHANNESBURG, Jan 14 (Reuters) – South Africa's high-end retailer Woolworths expects first-half profit to increase by 25-35 percent year-on-year with sales also forecast to rise, the company said in a trading update on Thursday.
Woolworths, which sells products similar to those of Britain's Marks and Spencer, said that without including the impact of David Jones, whose acquisition was effective in August 2014, group sales grew by 12.3 percent.
Headline earnings per share (EPS) is the main profit measure used in South Africa that strips out certain one-off times.
Woolworths will publish its half year results on Feb. 11.
Woolworths Sees Profit Rising Up to 35% as Food Sales Increase
By Liezel Hill
(Bloomberg) — Woolworths Holdings Ltd., South Africa's biggest retailer by market value, said first-half earnings probably climbed as much as 35 percent, as sales increased in clothes, food and 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 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 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.
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 over 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 have fallen 6.6 percent this year in Johannesburg, compared with a 4.5 percent decrease in the FTSE/JSE Africa All Share Index. The FTSE/JSE Africa General Retailers Index of 11 companies has declined 2.9 percent.