Woolworths store at the V&A Waterfront in Cape Town.
Woolworths store at the V&A Waterfront in Cape Town.

A number of investors have raised suspicions about possible irregularities in Woolworths share trading ahead of the release of its worst interim trading update in recent memory.

The retailer’s share price began sliding three days before it told the market on Thursday it expected headline earnings to drop as much as 7.5% to up to 247.2c for the 26 weeks to the end of December.

Woolworths’ share price dropped 8.15% to R65.23 between Monday and Wednesday. Most of the retailer’s shares changed hands on Wednesday — the day before the update — with 13.7-million shares traded.

Piet Viljoen, chairman of asset manager RECM, asked on social networking site Twitter if the JSE would investigate "one of its bigger clients". He was responding to a tweet from an investor who raised concern about the share trades that occurred ahead of the update.

However, Just One Lap trader and founder Simon Brown said there was no clear evidence of irregularities. "[The] bad update was expected and it was due this week, so weakness this week is not a surprise.

"Retailers are having a tough time and [Woolworths] has been losing market share; both continued this period. Overall a little weaker than I expected, but nobody thought they would boom," he said.

The large volumes traded on Tuesday and Wednesday "may have been a large position exiting", Brown said.

Woolworths head of communications Susie Squire said she was not aware of any breaches of Woolworths’ insider trading policy. "Woolworths does have an employee-wide insider trading policy, and a notice is sent out to all employees – directly and on the intranet – advising of closed periods when there can be no dealing in shares," she said.

"The notice also reiterates the criminal nature and consequences of insider trading. The JSE would investigate, if considered necessary, any suspicious trading in the first instance as they have the market surveillance capability," Squire said.

Peter Redman, a technical adviser at the bourse’s market regulation division, said it scrutinised trading ahead of all price-sensitive announcements.

"Should we discover anything that looks suspicious, we report our findings to the Directorate of Market Abuse at the [Financial Services Board]."

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