Woolworths Holdings Ltd. continues to face headwinds in its turnaround efforts for its clothing unit, as consumer spending remains under pressure in both South Africa and Australia.
Woolworths hit by earnings drop amid restructuring and weak consumer spending – Bloomberg
The Cape Town–based retailer reported a 5.8% decline in net income, reaching 2.44 billion rand (approximately $138 million) for the year ended June 30. The company, which has long struggled to find the right product mix in its home market, cited restructuring disruptions and an economic slowdown in Australia as additional drags on earnings.
The group’s stock fell by as much as 4.4% in early trading, marking it as the largest decliner on the FTSE/JSE Africa All Shares Index at 9:27 a.m. in Johannesburg.
Despite the challenging landscape, Woolworths’ Chief Executive Officer Roy Bagattini noted improvements in promotional efficiency. “We are much more effective at the way we promote,” he said in an interview, suggesting a more strategic approach to discounting amid weakened consumer demand.
Woolworths also reported an uptick in revenue from its lower-margin beauty category, while its strategic focus on children’s wear has started to show results. Bagattini acknowledged the benefits of such shifts, stating, “The fact that you end up growing lower margin categories faster is not necessarily a bad thing. If you can grow even lower margin categories much faster, that’s actually a better business decision at the end of the day, because we don’t bank percentages, but we bank rands.”
