Woolies trims dividend after tough period


Woolies trims dividend after tough period

Published Date: 2020-02-21 | Source: Stephen Gunnion | Author: Stephen Gunnion

Woolies trims dividend after tough period

The retailer says it is looking for ways to mitigate the risks associated with the coronavirus at its Australian operations.

Woolworths has had a difficult start to its financial year, exacerbated by December's load shedding and bad weather. It has also blamed disappointing Black Friday sales and product failure in its womenswear division for lacklustre sales. However, its food division has continued to outperform, growing first-half sales by 8.1% - and 5.4% on a comparable store basis.

In Australia, the group's David Jones department store chain grew turnover and concession sales by 4.9%. However, they were 0.5% lower after adjusting for the shift of the Christmas week which fell into the first half of the current year but the second half of the prior year. It said the bushfires over the period impacted sales, as did a refurbishment of its flagship Elizabeth Street tore in Sydney, although it still managed to gain market share. Sales at Country Road Group fell 2.5%, also affected by the bushfires, but were up 3.3% excluding the impact of its decision to withdraw concession sales from David Jones rival Myer.

For the group as a whole, turnover and concession sales rose 3.8% to R40.9 billion for the 26 weeks to 29 December and were 4.6% higher in constant currency. Adjusted profit before tax fell 21% to R2.1 billion and was 12.3% lower at R2.4 billion excluding the impact of the new IFRS 16 accounting standard. Headline earnings per share (HEPS) declined 18% to 164.9c, with pre-IFRS 16 HEPS down 10% to 180.2c. It trimmed its interim dividend by 3.3% to 89c per share.

Woolworths said consumer spending in Australia was likely to remain muted in the short-term due to stagnant wage growth and the impact of the bushfires. On top of that, the coronavirus was already impacting tourism, footfall and sales in Australia and was also expected to affect sourcing of its goods. It said it was looking for solutions to mitigate the risks associated with the pandemic.

Its shares fell 4.4% to R42.40 yesterday.

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