Woolworths CEO Ian Moir. Picture: FINANCIAL MAIL
Woolworths CEO Ian Moir. Picture: FINANCIAL MAIL

Woolworths reported that it rebounded to a net profit of R1.89bn in the first half of its 2019 financial year from a R4.86bn loss caused by a R6.9bn impairment of Australian department store chain David Jones.

Woolworths cut its interim dividend for a second consecutive financial year.

The retailer declared a 92c dividend for the first half of its 2019 financial year, down 15% from the 108.5c paid in the first half of its 2018 financial year, which in turn was down 18% from the R1.33 paid for the first half of its 2017 financial year.

The interim dividend declared on Thursday was the lowest Woolworths had paid since 2013.

The group’s SA food division helped it grow its top line 2.4% to R37bn for the 26 weeks ended December 23, but Australian department store chain David Jones, which it acquired for R21.5bn in 2014, dragged its operating profit down 5% to R3bn.

Image: Iress

The retailer reports in weeks rather than months, and its 2018 first half was placed in an unflattering light by ending on December 23 whereas the matching period in 2017 included Christmas Eve.

Woolworths’s food division contributed 42% of the group’s revenue, but only 27% of operating profit. It grew sales 6.3% to R15.4bn and profit 4.6% to R3.8bn.

Australian clothing chain Country Road was the group’s second-biggest operating profit contributor, even though it was only the third-biggest revenue contributor. Country road grew sales 0.7% to R.57bn, or 15% of the group’s total, and operating profit 1.2% to R3.6bn, or 26% of the group’s total.

David Jones contributed 21% of the group’s revenue, beating its SA fashion, beauty and home division, which contributed 19%. Both contributed 23% of the group's operating profit.

“Trading conditions are unlikely to improve in the short term in either SA, where the consumer remains under considerable pressure from a weak economy, and in Australia, where consumer sentiment remains constrained,” Woolworths CEO Ian Moir said in the results statement.

“However, we believe that structural changes made within our fashion, beauty and home business in SA, and the completion of the transformational projects within David Jones, with the exception of the Elizabeth Street store refurbishment, will enable both businesses to recover from recent under-performance and ensure longer-term growth and profitability. We expect the current momentum in Woolworths food and Country Road Group to continue.”

Correction: February 21 2019

An earlier version of this story speculated that a question mark instead of a dash or zero for an impairment of David Jones implied further impairments may be on the way. Woolworths said the question mark was caused by the JSE’s Sens service.