Things are getting a bit bearish
Woolworths' nightmare in Australia
The retailer still seems to be an investment to hang on to, despite the slower growth markets it is trading in
It is just over a year since overdone investor enthusiasm drove Woolworths’ share price to a record high. The subsequent one-third fall in the retailer’s stock and a halving of its p:e are now starting to smack of bearishness. Woolworths’ operations (in SA and Australia) have their challenges, as shown by a 2.4% fall in adjusted headline EPS (HEPS) in the 26 weeks to December 25. But they are being addressed by strategies that look to build on the group’s strengths as an apparel retailer with annual sales of more than R41bn and as a leader in upmarket food retail. Arguably Woolworths’ toughest challenge is its Australian fashion retailer, Country Road Group (CRG). Signs of big problems first appeared in Woolworths’ year to June 26, when CRG limped in with its pretax profit down 2.2% in rand and a far more disturbing 12.6% drop in Australian dollars. The rot continued in the latest interim reporting period, with CRG’s pretax profit in Australian dollars sliding another 16.7%. Adjuste...
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