24 November 2020
The Weekly
South Africa

Woolworths' group sales declined 2% during the first 20 weeks of the financial year on lower footfall and store closures due to Covid-19 across all of its markets. Woolies said changes in consumer behaviour which prevailed during the last quarter had largely persisted, with store footfall, particularly in large shopping centres, CBD and airport locations at significantly lower levels than the prior period. It recorded continued growth of its food business, despite a steep sales decline in Fashion Beauty and Home, and further pressure on its financial services due to reduced discretionary spending and lower interest rates. The group said the recovery at its Australian business was hampered by the lockdown in the state of Victoria last month, resulting in unplanned store closures. In South Africa, the easing of South Africa’s Covid-19 restrictions to level 1 was not enough to resuscitate consumer confidence. The group said turnover grew 9% at Woolies Food, with prices jumping by 7.1%, with reduced demand for lunchtime and snacking products and customers opting for larger pack sizes. Woolies last month announced that it was making its food products more affordable with a commitment to invest R1bn (US$ 65mn) in its prices over the next two to three years.

Sales at the FBI division slumped 14.6% underscoring its vulnerability to the constrained environment. The winter clearance sale was much smaller than that of the prior period and, together with a significant drop in demand for formal wear, negatively impacted sales growth for the period. However, the launch of summer ranges, coupled with the earlier start to Black Friday promotions, resulted in positive sales growth in the last three weeks of the period, said the group. The Woolworths Financial Services book contracted 1.6% year-on-year at the end of October, compared to a 2% year-on-year growth at the end of June 2020 on further pressure on revenue growth. The group said cash flow remained positive and net debt levels had continued to decline in both South Africa and Australia.