COMPANY COMMENT: Woolworths may offer a buying opportunity
Volumes, markdowns and promotions are expected to help create a buy opportunity for gradual share appreciation
With the time gradually approaching for general retailer Woolworths to report financial results for the year to June, not much seems to be going the retailer’s way in 2017. Against the background of distressed consumer spending, high interest rates and subdued economic growth, the group has guided growth for all its markets to be more or less in line with the first half. The widely expected sovereign debt downgrade from ratings agency Moody’s is likely to result in further risk-off trade in local assets.Woolworths reported sales growth of 6.7% to end December, with headline earnings per share down 4.3%. But return on equity was a healthy 22.8%. Its share price lost 29% in 2016, worse than the 11% retreat in the general retailers index. It is down 2.4% so far in 2017. The 2015 high of R108 now seems way ahead of the R69 at that it has been trading over the past month. On the positive side, Woolworths is seemingly consolidating in a range of between R66 and R70, which may offer a buyi...
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