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Unaudited Interim Group Results for period ended 29 December 2024, Dividend Declaration, Board Committees changes
Woolworths Holdings Limited
(Incorporated in the Republic of South Africa)
Registration number 1929/001986/06
LEI: 37890095421E07184E97
Share code: WHL
Share ISIN: ZAE000063863
Bond Company code: WHLI
("the Group" or "WHL")
UNAUDITED INTERIM GROUP RESULTS FOR THE 26 WEEKS ENDED 29 DECEMBER 2024, CASH DIVIDEND DECLARATION AND CHANGES TO THE WHL BOARD COMMITTEES
FINANCIAL OVERVIEW
Turnover and concession sales R40.3bn (+5.7% on LY)
Turnover R39.6bn (+5.4% on LY)
Profit before tax R2.6bn (+6.3% on LY)
Adjusted profit before tax R2.0bn (-20.6% on LY)
Adjusted diluted headline earnings per share 169.1cps (-19.4% on LY)
Headline earnings per share 152.8cps (-24.8% on LY)
Earnings per share 245.4cps (+20.9% on LY)
Net borrowings (excluding lease liabilities) R4.7bn (R4.1bn LY)
Interim dividend per share 107.0cps (-27.7% on LY; 148.0cps LY)
Return on capital employed 17.0% (22.3% LY)
GROUP
The Group's results for the first half of the 2025 financial year ("current period" or "period") reflect the continued strong performance from our
leading Food business, offset by lower contributions from our apparel businesses, with both Fashion Beauty Home ("FBH") and Country Road Group ("CRG")
in the throes of significant transformation.
From a macro-economic perspective, in South Africa, whilst discretionary spend remains constrained, consumer sentiment is improving, supported by
moderating inflation, easing interest rates, and the suspension of loadshedding. In Australia, notwithstanding improved consumer sentiment and the
uplift in retail sector sales, buoyed by Black Friday, the sustained effect of high interest rates and elevated living costs continues to weigh on
consumer behaviour and discretionary spend, resulting in elevated promotional intensity, and significantly reduced profitability at a sector level.
Within this context, Group turnover and concession sales for the current period increased by 5.7% and by 6.2% on a constant currency basis against
the prior comparative 26-week period (the "prior period"). The impact of softer-than-expected topline growth in our apparel businesses, coupled with
pressure on gross profit margins and the increased operating expenditure attributable to our transformation initiatives, negatively impacted
profitability during the period, particularly in the case of CRG. As a result, Group adjusted earnings before interest and tax ("aEBIT") declined
by 13.7% on the prior period, to R2.8 billion. Group adjusted earnings before interest and tax, depreciation and amortisation ("aEBITDA") decreased
by a lesser 6.4% to R4.5 billion, reflecting the impact of the investment in our various strategic and growth-enabling initiatives. Adjusted diluted
headline earnings per share declined by 19.4% to 169.1cps over the prior period, while headline earnings per share was down 24.8% to 152.8cps.
As part of the David Jones ("DJ") sale transaction in 2023, the Group retained the flagship property situated at 294 to 310 Bourke Street,
Melbourne, Australia (the "property"). The property was held as an investment asset and leased back to DJ on market-related terms. In December 2024,
the Group successfully disposed of the property for A$223.5 million (R2.6 billion), recognising a profit on disposal. As a result of the sale of the
property, earnings per share increased by 20.9% to 245.4cps.
The Group ended the period with net borrowings of R4.7 billion (versus net borrowings of R5.8 billion for the 53 weeks ended 30 June 2024), with the
Australian subsidiaries in a net cash position of A$226.1 million, following the sale proceeds received for the property. The net debt to EBITDA
ratio of 1.37 times is within our targeted gearing ratio and the Return on Capital Employed of 17.0% remains well above the weighted average cost
of capital of 13.1%.
WOOLWORTHS
The combined South African business grew turnover and concession sales by 9.1% for the period, notwithstanding the aforementioned context. Whilst
our Food business delivered strong aEBIT growth, this was offset by the lower contribution of FBH.
WOOLWORTHS FOOD
Our Food business delivered market-leading turnover and concession sales growth of 11.4% and 7.3% on a comparable-store basis. This was driven by
positive underlying volume growth from improved availability, ongoing innovation, and our enhanced value proposition, reinforcing the trust that
customers continue to place in our Woolies brand. Excluding Absolute Pets, which was acquired in the fourth quarter of the previous financial year,
Food sales increased by 9.0%, supported by continued market share gains arising from the continued successful execution of our strategies. Price
movement for the period averaged 6.0%. Trading space, excluding Absolute Pets, increased by 1.3% on the prior period. Woolies Dash, our on demand
offering, delivered sales growth of 49.2% for the period, with total online sales increasing by 37.2% and contributing 6.4% of Food sales.
Gross profit margin increased by 30bps to 24.9%, driven by more targeted and effective promotions, as well as value chain efficiencies, which more
than offset the impact of a growing online channel and the ongoing investment in our value proposition. An increase in operating expenses from
investments in growth initiatives, higher inflation and the inclusion of Absolute Pets, resulted in expense growth of 15.2%. Adjusted operating
profit grew by 7.8% to R1 720 million, delivering an operating profit margin of 6.7% for the current period.
WOOLWORTHS FASHION, BEAUTY AND HOME
Whilst our FBH business continues to make steady progress against its strategic priorities, performance over the half was impacted in part by a
temporary setback in product flow arising from the implementation of new processes and systems within our Distribution Centre ("DC")
Transformation - a specific initiative within our broader Value Chain Transformation. This, coupled with late supplier deliveries, resulted in
reduced product availability across much of our store base during the peak festive season. FBH turnover and concession sales increased by 2.5%
and by 2.7% on a comparable-store basis over the period, with price movement of 1.2%. Notwithstanding the slower topline performance, Fashion
also achieved positive underlying volume growth, with deflation of 0.8%. Our Beauty business has pleasingly sustained its momentum, delivering
growth of 17.3% over the period, and further establishing Woolies as the Beauty destination in South Africa. In line with our strategy to
rationalise unproductive space, net trading space decreased by 2.1% relative to the prior period, whilst online sales increased by 25.2% and
contributed 6.6% of FBH sales.
An increased level of promotional activity during the period relative to the prior period, additional supply chain costs associated with the
DC transformation, coupled with the margin dilutive impact of a strongly growing Beauty contribution, resulted in gross profit margin declining
by 170bps to 46.3%. Expense growth was well managed at 4.5%, notwithstanding the increased investment and associated costs of strategic
initiatives. Adjusted operating profit declined by 17.7% to R763 million, resulting in an operating margin of 9.8% for the current period.
WOOLWORTHS FINANCIAL SERVICES ('WFS')
The WFS book decreased by 3.7% on a year-on-year basis to the end of December 2024, but increased by 1.0% when excluding the sale of part of
the legal book. The annualised impairment rate for the six months ended 31 December 2024 improved to 5.4%, compared to 6.3% in the prior period,
and remains sector leading. WFS delivered underlying growth of 6.6% in profit after tax (excluding IFRS 17 transition adjustment in the prior
period) and a return on equity of 22.3%.
COUNTRY ROAD GROUP
Following the sale of David Jones in the 2023 financial year, and the successful separation of CRG from DJ in the 2024 financial year, CRG is
currently in the midst of a significant restructure to reconfigure its operating model and reset its structural economics as a standalone
business. This restructuring is being implemented in an accelerated timeframe. In addition, as mentioned, the apparel trading environment in
Australia and New Zealand remains significantly constrained, characterised by reduced footfall and spend, and intense promotional activity.
Within this context, sales declined by 6.2% for the period and by 7.8% on a comparable-store basis. Trading space decreased by 2.4%, while
online sales contributed 27.1% of total sales for the period, up from 26.8% in the prior period.
Higher promotional activity to manage inventory levels and the impact of a weaker Australian Dollar on input costs resulted in a 320bps
decrease in the gross profit margin to 58.9%. Whilst expenses were well controlled, decreasing by 1.3%, the impact of a weaker topline and
the business's temporarily higher cost base post the David Jones separation, resulted in significant negative operational leverage in the
period. Adjusted operating profit of A$14.2 million decreased by 71.7%, returning an operating profit margin of 2.6%.
OUTLOOK
Notwithstanding signs of improving consumer confidence across both geographies, recent positions taken by the USA regarding global trade
relations have elevated the forecast risk with regards to the macro-economic outlook for the current year, particularly in the case of
South Africa.
In Australia, whilst a gradual recovery in GDP growth, alongside easing monetary policy is expected, the retail sector is likely to remain
highly promotional until such time as the pressures of living costs ease. During the second half of the financial year, we will undertake
a reassessment of the carrying value of the assets of our underperforming brands within the Country Road Group. This exercise will give due
consideration to the macroeconomic environment, our strategic plans and our reset operating model.
Notwithstanding the potential impact of external factors across both our geographies, we are confident in our ability to achieve our
strategic objectives, and are well-positioned to benefit from any cyclical recovery in consumer spending.
Any reference to future financial performance included in this announcement has not been reviewed or reported on by the Group's external
auditors and does not constitute an earnings forecast.
C Thomson R Bagattini
Chairman Group Chief Executive Officer
Cape Town
4 March 2025
DIVIDEND DECLARATION
Notice is hereby given that the Board of Directors of WHL ('Board') has declared an interim gross cash dividend per ordinary share
('dividend') of 107.0 cents (85.6 cents net of dividend withholding tax) for the 26 weeks ended 29 December 2024, being a 27.7% decrease
on the prior period's interim dividend of 148.0 cents, based on a payout ratio of 70% of earnings.
The dividend has been declared from reserves and therefore does not constitute a distribution of 'contributed tax capital' as defined
in the Income Tax Act, 58 of 1962. A dividend withholding tax of 20% will be applicable to all shareholders who are not exempt.
The issued share capital at the declaration date is 988 695 949 ordinary shares. The salient dates for the dividend will be as follows:
Last day of trade to receive a dividend Tuesday, 25 March 2025
Shares commence trading 'ex' dividend Wednesday, 26 March 2025
Record date Friday, 28 March 2025
Payment date Monday, 31 March 2025
Share certificates may not be dematerialised or rematerialised between Wednesday 26, March 2025 and Friday 28, March 2025, both days inclusive.
Ordinary shareholders who hold dematerialised shares will have their accounts at their CSDP or broker credited or updated on Monday,
31 March 2025. Where applicable, dividends in respect of certificated shares will be transferred electronically to shareholders' bank accounts
on the payment date. Where the transfer secretaries do not have the banking details of any certificated shareholders, the cash dividend will
be held in trust by the transfer secretaries pending receipt of the relevant certificated shareholder's banking details after which the cash
dividend will be paid via electronic transfer into the personal bank account of the certificated shareholder.
CHANGES TO THE WHL BOARD COMMITTEES
In terms of our ongoing Board succession programme, the Board is pleased to announce the appointments of Lulu Gwagwa to the WHL Social and
Ethics Committee and Itumeleng Kgaboesele to the WHL Audit Committee, with effect from 5 March 2025.
CA Reddiar
Group Company Secretary
Cape Town
4 March 2025
ABOUT THIS ANNOUNCEMENT
Statement and availability
The Unaudited Condensed Interim Group Results were approved by the Board on 4 March 2025, and are available for review by accessing
the following links:
https://senspdf.jse.co.za/documents/2025/JSE/ISSE/WHLE/WHLFY25.pdf
https://www.woolworthsholdings.co.za/wp-content/uploads/2025/03/whlfy25.pdf
This short-form announcement, including the constant currency and pro forma financial information, is the responsibility of the directors.
As it does not provide all the details of the Unaudited Condensed Interim Group Results, any investment decisions by investors and/or
shareholders and/or bondholders should be based on consideration of the full announcement.
The Analyst Presentation will be available on the website later today at the link:
https://www.woolworthsholdings.co.za/wp-content/uploads/2025/03/Analyst_Presentation.pdf
DIRECTORATE AND STATUTORY INFORMATION
NON-EXECUTIVE DIRECTORS
Clive Thomson (Chairman)
Nombulelo Moholi (Lead Independent Director)
Lwazi Bam
Christopher Colfer (Canadian)
Rob Collins (British)
Belinda Earl (British)
Nolulamo Gwagwa
Itumeleng Kgaboesele
Thembisa Skweyiya
EXECUTIVE DIRECTORS
Roy Bagattini (Group Chief Executive Officer)
Zaid Manjra (Group Finance Director)
Sam Ngumeni (Chief Executive Officer: Woolworths Food)
GROUP COMPANY SECRETARY
Chantel Reddiar
DEBT OFFICER
Ian Thompson
REGISTRATION NUMBER
1929/001986/06
LEI
37890095421E07184E97
SHARE CODE
WHL
SHARE ISIN
ZAE000063863
BOND COMPANY CODE
WHLI
REGISTERED ADDRESS
Woolworths House
93 Longmarket Street
Cape Town, 8001, South Africa
PO Box 680, Cape Town 8000, South Africa
TAX NUMBER
9300/149/71/4
JSE EQUITY AND DEBT SPONSOR
Investec Bank Limited
TRANSFER SECRETARIES
Computershare Investor Services Proprietary Limited
5 March 2025
Date: 05-03-2025 07:05:00
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