Woolworths posts substantial growth in online sales


Woolworths posts substantial growth in online sales


Published Date: 2021-07-20 | Source: INCE|Community | Author: The Finance Ghost

Woolworths posts substantial growth in online sales

Woolworths Holdings needed to update the market on its trading performance for the 52 weeks ended 27 June 2021. On top of that, the group gave an update on the impact of civil unrest.

Because of the nature of the Woolworths footprint, only eleven stores were looted. Nine were in KwaZulu-Natal and two were in Gauteng. Looters did gain access to a Woolworths distribution centre but the property was secured and there was no major damage.

Clearly, TVs and microwaves from Game are more appealing to looters than organic meals sourced from the forests of Germany and only harvested at certain times of night - and that's not even the fancy stuff!

Jokes aside, the market positioning of Woolworths Food is why the business puts in a great performance every single year. Despite the high base as a result of stockpiling in the comparable period (when everyone fought over the toilet paper and soy yoghurt six-packs), Food still grew sales by an impressive 6.9%.

Underlying product inflation was 4.9% and new space contributed a further 0.6%. This means that 1.4% was thanks to volume growth.

Another important statistic is that online sales grew 117.9% vs. the prior year, now contributing 2.3% to overall Food sales. That's still a small overall contribution but this is becoming an incredibly important way to compete for share of wallet of high-LSM households.

Unfortunately, the difficult story in the group continues to be the Fashion, Beauty and Home (FBH) business. Selling formalwear wasn't easy in the past year, with most people working from home in their shorts or even pyjamas.

With total revenue up 3.5% and inflation running at 7.5%, volumes were negative. The contribution from new space was also negative, as the group has actually reduced its net space in order to improve trading densities. That's not an easy decision and shows a maturity in management to try and get the FBH division on the right track.

Online sales in FBH were up 114.4%, giving a total contribution of 4.1% of South African sales.

The Australian business has given many nightmares to Woolworths investors. David Jones managed to increase sales by 2.3%, which is hardly exciting. Interestingly, online sales grew 24.4% to a contribution of 17.3% of total sales, showing the difference between South Africa and a more mature online market like Australia.

Country Road Group was much better, with sales growth of 13.4% attributed to a refreshed product offering across all brands. Online sales were up 30.7% and contributed 29.7% to total sales.

The average Australian dollar exchange rate was R11.43 for this period and R10.43 for the prior year, so the net effect of the offshore businesses will be amplified when reported in rands. This is why group sales rose 9.7% in ZAR but only 5.9% in constant currency terms.


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