Woolworths Holdings has issued a cautionary statement anticipating a potential reduction of up to 27% in its profit margins for the first half of the fiscal year 2025, citing decreased earnings from its clothing divisions across South Africa, Australia and New Zealand.
For the 26 weeks concluding 29 December 2024, Woolworths projected a contraction in headline earnings per share of between 22% and 27% - a stark contrast to the 203.3 cents reported in the comparable period ending 24 December 2023.
Despite this setback, the company's overall turnover and concession sales experienced an uplift of 5.7%, or 6.2% when adjusted for currency fluctuations.
Woolworths' food division registered an impressive market-leading surge in sales growth of 11.4% and 7.3% on a constant currency basis.
The company stated: "The group trading performance for the half reflects continued strong sales growth from our leading food business, with lower contributions from our apparel businesses in South Africa, Australia and New Zealand."
Sales growth in the final eight weeks of the period decelerated to 4.3%, partially attributed to a shift in the trading calendar relative to the previous year.
The company attributed its robust food business performance to "positive underlying volume growth from improved availability, ongoing innovation and our enhanced value proposition".
The fashion, beauty and home segment posted a modest increase of 2.5% in sales, with growth further constricted to 0.9% during the latter part of the period.
This slowness was partly due to temporary product flow interruptions caused by late supplier deliveries and adjustments within its distribution centre associated with value chain enhancements.
The apparel market in Australia and New Zealand continues to be highly promotional, driven by consumers focused on pricing. As a result, sales fell by 6.2% for the period and decreased by 7.8% on a like-for-like store basis.
Sales performance in the final eight weeks of the period, especially on 2024's Black Friday and Cyber Monday and during the holiday season, showed improvement compared to the previous eighteen weeks, with a smaller decline of 2.7%.
Both fashion divisions operating within these markets are undergoing comprehensive transformation initiatives. Notably, Country Road is restructuring its operational framework following its divestiture from and subsequent independence of David Jones.
