Woolworths Holdings warns of earnings drop amid restructuring challenges

Woolworths Holdings has warned that its adjusted headline earnings per share (aHEPS) will fall between 17% and 22% for the year to June 29 after a restructuring impacted its Australian business, and despite continued revenue growth in South Africa.

The grocery and fashion, health and beauty retailer warned in a trading statement Thursday that aHEPS will likely be between 292.8 cents to 311.6 cents, compared with 375.4 cents at the same time last year. As of this month, more than 24 000 Woolworths employees have access to health insurance, the first group in the retail sector to offer benefits of this scale.

Turnover for the group increased by 6.4% and concessional sales by 7.3% in the 52 weeks to June 29, despite the tough macroeconomic conditions and significant uncertainty arising from global trade relations.

Woolworths financial director Zaid Manjra said in the trading statement that in South Africa, consumer sentiment and discretionary spend remains subdued despite moderating inflation and interest rate cuts. However, Woolworths South Africa delivered strong turnover and concession sales growth of 9.4%.

Within this, the food business delivered above-market turnover and concession sales growth of 11% and 7.7% on a comparable-store basis. Price movement averaged 5.3%, with volume growth driven by increased footfall and average basket size.

Excluding Absolute Pets, acquired in the fourth quarter of the prior period, food sales increased by 9.2%. Sales growth in the second half was 10.6% (9.4% excluding Absolute Pets), with price movement of 4.2%.

Trading space increased by 2.4%. The on-demand Woolies Dash offering grew by 41.6%, with overall online sales increasing by 32.9% and contributing 6.6% to total food sales.

Fashion, beauty and home turnover and concession sales increased by 4.7% and by 5.1%. Trading momentum improved and second half sales increased to 7%, after the product flow challenges in the first half were resolved.

Price movement averaged 2.2%. The beauty business gained market share, delivering growth of 14.7%. Net trading space in this segment fell by 2.3%, while online sales increased by 22.8%.

The Woolworths Financial Services book decreased by 2.7% year-on-year and increased by 0.5% excluding the sale of part of the legal book of R1.6 billion.

The impairment rate for the 12 months ended 30 June 2025 improved to 6.1%, compared to 7.0% in the prior period, and “remains sector leading,” the directors report.

Following its separation from David Jones, Country Road Group (CRG) completed a restructuring to reconfigure its operating model and reset as a standalone business.

This was undertaken in an accelerated timeframe and within an unconducive macro backdrop, as pressure from high interest rates and living costs impacted consumer footfall and spending.

The short-term business disruption saw sales decline by 5.4% and by 6.8% on a comparable-store basis. Trade performance in the fourth quarter improved significantly, declining by a lesser 0.3%, with second half sales declining by 4.5%.

The Country Road and Trenery brands traded ahead of the rest of the CRG brands. Trading space decreased by 0.8%, while online sales contributed 28.6% of total sales for the period, up from 27.7% in the prior comparable period.

The group successfully disposed of property in Australia for A$223.5m, recognising a R792m profit on disposal.

BUSINESS REPORT