Woolworths is facing significant financial difficulties across its South African, Australian, and New Zealand operations due to weak consumer spending. For the fiscal year ending June 30, 2024, the company expects a substantial profit drop.
Despite reporting a 6.2% increase in group turnover and a 5.6% rise in concession sales from ongoing operations, these results are not directly comparable to the previous year due to the sale of David Jones and an additional reporting week. Including David Jones' previous contributions, turnover and concession sales fell by 16.4%.
In South Africa, while disruptions from load shedding and port congestion improved, high living costs and interest rates impacted consumer spending. Woolworths' food business performed well, with sales growing by 11.2%, and online food sales rising by 52.8%. However, the Fashion, Beauty, and Home divisions struggled, showing only modest growth.
In Australia and New Zealand, the retail environment worsened, with Country Road Group experiencing a 6.8% drop in sales. The company faced challenges from a weaker Australian dollar and high fixed costs, leading to a non-cash impairment of goodwill.
Woolworths forecasts a 32.0% to 37.0% decline in earnings per share from continuing operations and a 45.0% to 50.0% drop including David Jones. Despite these challenges, the company continues to focus on strategic investments and cost management.
