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Woolworths South Africa Dives Deep into Food Business, Posting Promising Yearly Performance

Published September 21, 2023
8 months ago

Woolworths South Africa is setting its growth course firmly in the arena of food products, following strong annual results released on Wednesday. The retailer's performance for the year ending 25 June showed an impressive 7% increase in turnover, climbing to R85.7-billion, and a significant pre-tax profit jump of almost 30%, reaching R6.7-billion, with a large fraction being attributed to the food division.

The adjusted operating profit ballooned by 21.3% to R1.95-billion, accompanied by an operating profit margin for the year under review at 13.2%, a notable improvement from the 11.9% recorded in the prior year. This promising performance renders shareholders a succulent total dividend of 313 cents per share, up by a hefty 36.4%.

Despite challenges posed by frequent power blackouts, Woolworths' food division has consistently scaled in revenue over its Fashion Beauty Home (FBH) business. The food sector almost touched the R42.5-billion mark in revenues for the reviewed year, up from R39.24-billion in the previous period, greatly surpassing the FBH earnings of R14.63-billion.

One of the performance boosters in the food division has been the 28.5% increase in online sales, fuelled by the further roll-out of the Woolies Dash delivery service. The FBH business also showed notable progress with above-market sales growth and improved profitability, alongside share repurchase totalling R2.9-billion for the current year.

In a bid to maintain their eight-minute cold chain rule, the company sent nearly R1-billion worth of food unfit for sale to food banks and charities last year. The company also expects the food division to expand into pet, wellness, food service and liquor.

The company's financial services department saw a rise of 14.5% driven by growth in new accounts and credit card advances. Meanwhile, their Country Road Group’s sales surged by 12%. Despite the operational costs and challenges, the emphasis remains on the food business, which emerged as the strongest earnings driver.

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