Woolworths (South Africa) announces FY results

Jon Wright
Head of Insight - RA EMEA
@RetailAnalysis

Date : 24 September 2020

Woolworths (South Africa) has released full year results for the 52 weeks ending June 2020 that showed turnover fell by 1.2% to ZAR72.2 bn (US$4.3 bn). It noted its 2019 financial year had benefited from being a 53-week year. Underlining the challenging nature of the year, the retailer reported a 54.5% fall in adjusted profit before tax to ZAR2.2 bn (US$129.6m).

COVID-19 had ‘significant impact on performance

Woolworths noted the ‘exceptionally challenging year… characterised by two distinct halves, with COVID-19 having a significant impact on the performance of the second half’. COVID-19 restrictions led to ‘store closures, reduced footfall, lost sales and margin dilution due to promotional and other initiatives to clear inventory’.

Woolworths Food remained ‘resilient’…

Despite the challenges, Woolworths noted the strength of its Food business, which generated revenue of ZAR34.68 bn (US$2.0 bn) in the 2020 financial year. It said ‘sales peaked in March and April, with above-market growth continuing into May and June’. It reported turnover and concession sales grew by 13.3% in H2, which helped boost full year sales by 10.2% overall. This growth, it said, was particularly pleasing given the challenging operating conditions, which led to restricted trade at its ‘hot food counters, wine alcoves and WCafé business, and the intermittent closure of specific stores with COVID-19 incidents.

…With online sales rising strongly

Although coming from a low base, Woolworths said online food sales increased by 87.8% in the second half of the year, which pushed up the channel’s performance for the full year to 57.2%. It did note that despite the positive picture the growth rates painted, there was still a ‘need for further improvements to [its] fulfilment capability in this area’.

Steps being taken in Australia too

Separately from its non-grocery operations in the country, Woolworths said its roll-out of its partnership with BP, which is seeing its food offer added to its forecourt stores, was ‘progressing well’. However, it did say the food business incorporated in its larger David Jones business continued to be loss making, which would require it to be put under review.