South African retailer Woolworths' sales rise 8.9% in FY23

Price movement of 11.6 per cent remained positively impacted by the ongoing focus on full-price sales and the continued reduction in markdowns. Net trading space was largely unchanged over the prior year. Online sales grew by 3.8 per cent and contributed 4.3 per cent of South African sales.

Continued focus and further improvement in full-price sales and markdown metrics supported gross profit margin gains of 90 bps to 48.5 per cent, notwithstanding inflationary supply chain and load shedding costs. Adjusted operating profit increased by 21.3 per cent to R1 953 million, resulting in an operating profit margin of 13.2 per cent for the current year, compared to 11.9 per cent in the prior year. Excluding the impact of load shedding, adjusted operating profit grew by 24.8 per cent, implying an operating profit margin of 13.6 per cent, the company said in a press release.

Gross profit margin increased by 40 bps to 24.4 per cent, notwithstanding the impact of load shedding on waste and supply chain costs, the growth in online sales, and the ongoing investment in price. Additional load shedding-related diesel costs, coupled with higher cost inflation, resulted in expense growth of 12.4 per cent. Adjusted operating profit grew by 2.9 per cent to R2 976 million, returning an operating profit margin of 6.9 per cent for the current year, compared to 7.3 per cent in the prior year. Excluding the impact of load shedding, adjusted operating profit grew by 9.1 per cent, returning an operating margin of 7.3 per cent.

“It has been a transformational year for our group. I am very pleased with the progress our teams have made in executing against our strategies, delivering a strong set of results and the highest earnings per share in the history of our group. The disposal of David Jones is a major milestone in repositioning our group for growth. As a result of this transaction, we have unlocked R7.7bn in value for shareholders since 2022, and more importantly, can now reallocate both our capital and management attention towards the more value-accretive initiatives across the group’s core Woolworths and Country Road Group businesses,” Roy Bagattini, Woolworths Group CEO, said.

“We are confident in our ability to deliver against our strategies, notwithstanding the challenging macro backdrop. We have a robust balance sheet and a simplified group structure post the sale of David Jones, and are well positioned to leverage our strengthened foundation to not only optimise and grow our businesses, but to permanently change the value creation profile of our group,” Bagattini added.

Fibre2Fashion News Desk (RR)