Woolworths stung by retail malaise in Australia
Food and clothing retailer Woolworths has been deepening its presence in Australia since 1998, when it bought Country Road.
But now that the retailer's Australian dream has been realised, the business does not appear to be delivering anticipated benefits. Woolworths' Australian business, including David Jones and Country Road, accounted for 42% of operating profit, yet in the 26 weeks to December 25 2016 operating profit for David Jones increased by a marginal 1.9% to A$106-million (about R1.06-billion). Ashraf Mohamed, chief investment officer at JM Busha, said the Australian operations' performance was "not inspiring, which will remain a major concern for the business". Mohamed said when Woolworths went into Australia, it had created a significant expectation for the market, which is why it had received a premium rating relative to its peers, but "now reality is starting to bite". The first point of concern should be whether the South African business was expected to fund the group's expansion in Australia, he said. But muted growth in South Africa and the general malaise that has infected Australia's ...
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