Woolworths expects up to 12% earnings rise on festive sales

Source: Reuters/Esa Alexander

Headline earnings per share are expected to rise by between 7% and 12% in the 26 weeks ended 28 December, from 152.8 cents in the prior period.

Group turnover and concession sales for the period rose by 5.4% and in constant currency by 6.1%, buoyed by positive sales growth in all segments of the business, despite the constrained macroeconomic environment across both South Africa and Australia.

Woolworths South Africa delivered "above-market" turnover and concession sales growth of 6.8%, with the food business growing revenue by 7% as the retailer continued to invest in premium food offerings, it said.

Fashion, beauty and home turnover and concession sales increased by 6.2% and by 6.4% on a comparable-store basis, supported by improved product availability as a result of the retailer's supply chain initiatives, it said.

This momentum was maintained over Black Friday and the festive season, with sales growth of 6.1% in the last seven weeks of the period, "implying encouraging market share gains over the half and positive underlying volume growth," Woolworths said.

In Australia, Country Road, grappling with heavy discounting across the sector and low discretionary spend, managed to increase sales by 2.3% and by 2.5% on a comparable-store basis, benefiting from a brand revamp and the restructuring of the chain's operating model.

Woolworths' budget fashion retail peer Mr Price, painted a different picture on Wednesday for low to middle-income earners, reporting slower sales growth of 3.6% in the key festive season trading quarter ended December 27, compared with 10.6% in the prior year's quarter.

Mr Price said disposable income growth of its customers "continued to be absorbed by high household debt servicing costs and the diversionary spend into online betting and other categories."