Woolworths releases financial results for 2021/2022 | Business (2024)

Woolworths has released a summary of the Audited Group Results for the 52 weeks ended 26 June 2022 and Cash Dividend Declaration.

COMMENTARYON PERFORMANCE

The Group’s turnover and concession sales for the 52 weeks ended 26 June 2022 (‘current year’, ‘full year’ or ‘year’) increased by 1.4% compared to the 52 weeks ended 27 June 2021 (‘prior year’) and by 2.6% in constant currency terms. Online sales grew by 16.4%, contributing 12.4% to the Group’s total turnover and concession sales over the year.

Notwithstanding the volatile global backdrop, trade during the second half of the year (‘H2’) showed an improved run rate over the first half of the year (‘H1’) across all our businesses, with Group turnover and concession sales growing by 4.9%, and by 5.6% in constant currency terms, respectively, as lockdown restrictions eased and our focus on trade and executing against our strategic priorities gained further momentum.

As mentioned in our interim results released on the JSE Stock Exchange News Service (‘SENS’) on 2 March 2022, trade during H1 was severely impacted by the extended lockdowns in Australia, and to a lesser extent by the civil unrest in South Africa. This, coupled with the absence of JobKeeper allowances in Australia and rent relief, which supported the prior year base, the profit on sale of the Bourke Street Men's and Elizabeth Street properties, as well as lease exit and modification gains, makes the full year trading result non-comparable to that of the prior year.

Earnings per share (‘EPS’) was 387.4cps compared to 435.1cps for the prior year, while headline EPS (‘HEPS’) and adjusted diluted HEPS increased by 6.5% and 9.7% over the prior year to 398.9cps and 374.9cps, respectively. Adjusted diluted HEPS in H2 grew by 43.8% on the prior year.

The Group ended the year with a robust balance sheet and a net cash position of R229 million. Solid working capital management and a focus on capex prioritisation resulted in cash conversion exceeding 100%, generating Free Cash Flow of 448.3cps. This supported a share buyback of R1.5 billion over the months of June and July 2022 and a reinstatement of the Woolworths SA and Country Road Group dividend at a 70% payout ratio.

During theyear, the Board of David Jones declared a special dividend to WHL of A$90million (approximately R1 billion), with these proceeds utilised to reduce debtin South Africa. Given that David Jones exceeded its cash forecast for theyear, a further A$50 million of capital is planned to be returned to WHL, postyear-end.

SOUTH AFRICA

WOOLWORTHSFASHION, BEAUTY AND HOME (‘FBH’)

The FBHbusiness grew H2 turnover and concession sales by 6.5%, with full-priced salesgrowing by 8.8%, supported by improved product resonance, market share gains inour ‘must win’ categories, and a stronger performance from the rest of Africa.Sales for the full year grew by 5.4% and by 7.3% in comparable stores, whiletrading space declined by 4.5%, supporting a double-digit increase in tradingdensities. Price movement averaged 6.0% over the full year and remainspositively impacted by reduced markdown. Online sales grew by 13.2% and contributed4.4% to South African sales.

Gross profitmargin increased by 210bps to 47.6%. Expense growth was contained to 1.8%,supported by a 1.7% decline in store costs, as a result of our space reductionand cost optimisation initiatives. Adjusted operating profit increased by 48.7%to R1 610 million, resulting in an operating margin of 11.9% for the year,compared to 8.4% in the prior year.

WOOLWORTHSFOOD

TheWoolworths Food business grew turnover and concession sales in H2 by 4.6%, withtrading momentum improving throughout the period, as Covid-19 base effectseased. Sales for the full year grew by 4.2%, and by 3.1% in comparable stores,reflecting the impact of the high base and the return to out-of-homeconsumption, an increasingly competitive backdrop, and low product inflationacross our key categories. Price movement averaged 3.5% for the full year, withunderlying product inflation at 3.9%, reflecting continued price investment.Space grew by 1.8% relative to the prior year. Online sales increased by 45.4%,contributing 3.2% of South African sales, assisted by the further rollout ofour on demand online offering.

Gross profit margin decreased by 50bps to24.0%, due to growth in online sales, supply chain costs and a level of price investment.Expenses grew by 5.7%, primarily reflecting investment in initiatives,including online. Adjusted operating profit grew by 0.4% in H2, with full yearprofit declining by 3.9% to R2 893 million, returning an operating profitmargin of 7.3% for the year, compared to 7.9% in the prior year.

WOOLWORTHS FINANCIAL SERVICES (‘WFS’)

TheWoolworths Financial Services book reflects a year-on-year increase of 6.8% at30 June 2022, driven by demand and a recovery in post Covid-19 spend. Theimpairment rate for the year ended 30 June 2022 improved to 4.7%, compared to5.3% in the prior year, reflecting strong collections and continued strength ofthe book. Return on equity increased to 18.4%, from 13.6% in the prior year.

AUSTRALIA AND NEW ZEALAND

As mentionedpreviously, trade in H1 was significantly impacted by government-enforcedrestrictions across the region which required the closure of storesrepresenting more than 70% of our brick-and-mortar sales for an extendedperiod. In H2, strong consumer demand and our focus on trade resulted in ahealthy rebound in sales.

DAVID JONES(‘DJ’)

DJ turnoverand concession sales declined by 2.6% for the full year and by 2.5% incomparable stores, but grew by 4.3% in H2, after the easing of lockdownrestrictions. In line with our space optimisation initiatives, trading spacereduced by a further 2.6% relative to the prior year. Online sales increased by28.7% and contributed 22.8% to total sales over the full year.

Gross profitmargin was maintained at 35.2%, notwithstanding the clearance of H1 inventorybuild-up. Expenses declined by 3.6%, driven by the successful execution ofcost-out initiatives and the rationalisation of the DJ food offering. Adjustedoperating profit in H2 grew by 85.5% to A$52.5 million. For the full year,adjusted operating profit declined by 0.6% on the prior year to A$83.7 million,returning an operating profit margin of 4.1%, compared to 4.0% in the prioryear. This was achieved despite Covid-19 related government support and rentconcessions in the prior year base.

COUNTRY ROADGROUP (‘CRG’)

CRG salesgrew by 9.0% and by 11.3% in comparable stores for H2, resulting in positivefull-year sales growth of 3.1% and 4.0%, respectively, notwithstanding afurther 8.1% reduction in trading space. This result was driven primarily by astrong performance from the Country Road, Trenery and Politix brands, followingthe successful launch of new ranges and the ongoing focus on brand and productpositioning. Online sales increased by 4.6% and contributed 31.6% to totalsales for the year.

Gross profitmargin declined by 130bps to 59.5%, as a result of increased clearance salesfollowing the extended lockdown, coupled with higher freight costs arising fromglobal supply chain constraints. Expenses increased by 8.2%, as a result of theprior year impact of JobKeeper subsidy and rent rebates. Adjusted operatingprofit in H2 grew by 18.6% to A$72.1 million. For the full year, adjustedoperating profit was 22.3% lower at A$120.2 million, returning an operatingprofit margin of 11.1% compared to 14.7% in the prior year.

OUTLOOK

The globalmacro environment remains volatile, with rising inflation and interest ratesposing a headwind to the outlook for economic growth. Whilst this impact onAustralian consumer spend should be somewhat mitigated by strong householdbalance sheets and high employment, South African consumption faces highunemployment and severe energy shortages.

Global supplychain uncertainties and elevated freight costs have been exacerbated by recentglobal events, placing significant upward pressure on raw material availabilityand input pricing. Notwithstanding this backdrop, the current momentum of ourapparel businesses is expected to continue, and our Food business is expectedto deliver a solid underlying performance whilst investing in key initiatives.

We have arobust balance sheet, and significant self-help opportunities across ourbusinesses to grow both revenue and profitability, and are allocating capitalaccordingly to enhance the overall returns profile of our Group.

Any referenceto future financial performance included in this announcement has not beenreviewed or reported on by the Group's external auditors and does notconstitute an earnings forecast.

H Brody,Chairman, Cape Town, 30 August2022

R Bagattini,Group Chief Executive Officer

DIVIDEND DECLARATION

The Board ofDirectors of WHL (‘Board’) has taken a decision to declare a final gross cashdividend per ordinary share (‘dividend’), based on a pay-out ratio of 70% ofsecond half headline earnings of the combined Woolworths South Africa businesssegments (FBH, Food and WFS) as well as Country Road Group.

Notice ishereby given that the Board has declared a final dividend of 149.0 cents (119.2cents net of dividend withholding tax) for the 52 weeks ended 26 June 2022,being a 125.8% increase on the prior year’s 66.0 cents. This brings the totaldividend for the year to 229.5 cents, representing a 247.7% increase on theprior year’s total dividend of 66.0 cents. The dividend has been declared fromreserves and therefore does not constitute a distribution of ‘contributed taxcapital’ as defined in the Income Tax Act, 58 of 1962. A dividend withholdingtax of 20% will be applicable to all shareholders who are not exempt.

The issuedshare capital at the declaration date is 1 024 671 335 ordinary shares. Thesalient dates for the dividend will be as follows:

Last day of trade to receive a dividend: Tuesday, 13 September 2022

Shares commence trading ‘ex’ dividend: Wednesday, 14 September 2022

Record date: Friday, 16 September 2022

Payment date: Monday, 19 September 2022

Sharecertificates may not be dematerialised or rematerialised between Wednesday, 14September 2022 and Friday, 16 September 2022, both days inclusive. Ordinaryshareholders who hold dematerialised shares will have their accounts at theirCSDP or broker credited or updated on Monday, 19 September 2022. Whereapplicable, dividends in respect of certificated shares will be transferredelectronically to shareholders’ bank accounts on the payment date. Where thetransfer secretaries do not have the banking details of any certificatedshareholders, the cash dividend will be held in trust by the transfersecretaries pending receipt of the relevant certificated shareholder’s bankingdetails after which the cash dividend will be paid via electronic transfer intothe personal bank account of the certificated shareholder.

CAReddiar,Group Company Secretary, Cape Town, 30 August2022

CHANGES TO THE BOARD OF DIRECTORS

As announcedon SENS on 29 August 2022, Mr Robert Collins was appointed as an independent Non-executiveDirector of WHL, with effect from 1 October 2022. Mr Collins spent over 27years at John Lewis Partnership Plc, holding various management roles,including managing director of Waitrose until 2020. The Board looks forward towelcoming Rob to the Group.

As announced on SENS on 7 July 2022, MsNombulelo (Pinky) Moholi was appointed as the Lead Independent Director of theBoard, with effect from 7 July 2022. Ms Moholi has deep knowledge of the WHL Group, andextensive Board experience. The Board looks forward to Ms Moholi’s contributionin her expanded role.

This post was sponsored and supplied by Woolworths.