Woolworths shares profit from sale of David Jones’s head office with shareholders
Retailer says the growth in clothing and general merchandise sales is ‘a good result in a tough and promotional market’
Woolworths shared its R1.76bn profit from the sale of Australian department store David Jones’s Sydney head office with shareholders by maintaining its interim dividend at R1.33 despite a decline in headline earnings.
Diluted headline earnings per share (HEPS), which excludes profit from the property sale, fell 4.1% to 241.3c for the 26 weeks to December 25, the retail group reported on Thursday morning.
Overall revenue grew 7.1% to R35bn and the R1.76bn windfall from the property sale helped net profit jump 37% to R3.3bn.
Woolworths splits itself into four segments. Of these, food is the largest contributor to retail sales, accounting for 39% of the total R34bn. But food’s contribution to the group’s R14bn gross profit is 24%, placing it behind David Jones and its clothing and general merchandise division. David Jones contributed 23% of the group’s sales and 27% of its gross profit.
Woolworths’s clothing and general merchandise division contributed 21% of total sales and 25% of gross profit, and Country Road 16% of total sales and 24% of gross profit.
"Food sales grew by 9.5%, with comparable sales up 5.6%. Price movement of 9.2% remains high due to the impact of the drought. We continue to grow ahead of the market," CEO Ian Moir said in the results statement.
"Gross margin decreased by 0.4 percentage points to 25% as a result of our investment in lower prices and increased levels of promotion. Store costs increased by 10.3% and comparable store costs increased by 4.7%."
The store space allocated to food increased by 7.9%.
"Clothing and general merchandise sales grew by 3.5%, a good result in a tough and promotional market. Price movement was held to 7.3%, despite the impact of a weaker rand on imported product. Comparable sales grew by 1.2%," Moir said.
Woolworths increased its clothing and general merchandise floor space by 2.9%.
"David Jones’s sales grew by 4% and comparable sales by 0.5% (in Australian dollars) after adjusting for the timing of the Boxing Day sale (a material event), which falls into the second half of this financial year, as well as by last year’s termination of the Dick Smith electronics concession. This negatively impacted sales growth by 2.7% and 1.6% respectively," the results statement said.
Country Road Group sales were 0.9% lower than the previous period after adjusting for the Boxing Day sale and the inclusion of sales from the new acquisition Politix.