Woolworths Holdings Ltd. reported full-year profit that beat analyst estimates as the South African retailer benefited from a more “resilient” higher-earning customer base.
Diluted headline earnings per share, which exclude one-time items, rose 8.9 percent to 4.53 rand in the year ending June 26, the Cape Town-based company said in a statement on Thursday. That compared with the 4.45-rand average estimate of six analysts. Sales rose 16 percent to 72.1 billion rand ($5 billion).
Woolworths follows Shoprite Holdings Ltd. as South African retailers reporting increased sales and profit this week, even as slowing economic growth weakens consumer confidence in their home market. Woolworths also benefited from increased revenue in Australia, where it acquired Sydney-based department-store operator David Jones in 2014.
The shares rose 3.3 percent to 88.34 rand by 9:15 a.m. in Johannesburg, on track for their biggest gain in a month. That pared declines for the year to 12 percent, valuing the company at 93 billion rand.
‘Horrible Winter’
The mid-to-higher income customer is “being more resilient,” Chief Executive Ian Moir said in a presentation. “Food sales have softened slightly in line with the market but still trading relatively strongly and we are still taking market share.” The company plans to invest as much as A$100 million ($76 million) in David Jones’s food offering over the next three years and sees it becoming profitable in 2019, Moir said.
Clothing sales suffered due to a “horrible, non-existent winter,” the CEO said, yet were performing better now the southern hemisphere has entered the spring season.
The retailer is also seeing increased competition in both South Africa and Australia with the arrival of northern hemisphere rivals, the company said. A focus over the next two years will be keeping prices as low as possible, Moir said. Woolworths competes mainly with Shoprite and Pick n Pay Stores Ltd. in South Africa.
Woolworths raised the total dividend by 27 percent to 3.13 rand per share.
(Updates with share price in fourth paragraph.)
To contact the reporter on this story: Liezel Hill in Johannesburg at lhill30@bloomberg.net. To contact the editors responsible for this story: Tara Patel at tpatel2@bloomberg.net, John Bowker, Andrew Noël
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