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Load shedding, bad weather hit Woolworths sales

27 Jan 2020, 22:14 GMT+10

Woolworths [JSE: WHL] has blamed slower sales on load shedding and unseasonal weather.

On Monday morning, Woolworths released a trading update for the 26 weeks to 29 December, and warned that its headline earnings will drop by between 15% to 20% when it releases its full results next month.

This is despite an 8% increase in Woolworths food sales in South Africa - for comparable stores, sales grew by more than 5%. Prices of Woolworths food products were 5% higher than last year.

Sales of its local fashion, beauty and home products grew by only 0.9%, with clothing prices up 4%.

"In South Africa, the constrained economic environment, exacerbated by the disruption to trade caused by power outages and unseasonal weather in parts of the country, contributed to slower December trade," Woolworths said in a statement. Gauteng and KwaZulu-Natal were hit by heavy rain at the start of the crucial December trading season, while the Western Cape saw unseasonal rain and cooler conditions over December.

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Woolworths' struggling Australian department store business, David Jones, saw a 0.4% fall in comparable store sales (including online sales).

"The disruption from the Elizabeth Street store [the David Jones flagship department store in Sydney] refurbishment, due for completion in March 2020, has reduced, compared to the second half of last year, as additional floors have opened for trade."

David Jones' online sales rocketed by almost 62%, and now represent 10% of its total sales.

Its Country Road business, also in Australia, saw sales fall by 2.5% due in part to the decision to stop selling its clothes through the Myer department stores.

"As the contribution from online sales increases, the reduction of unproductive space remains a priority in David Jones and the Country Road Group," Woolworths said.

The Woolworths share price was down more than a percent by mid-morning.

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