Retail group Woolworths has opted not to pay an interim dividend even though it grew profits, warning the first few months of 2021 should be tough as SA grapples with the economic fallout from Covid-19.
Headline earnings rose 58.6% to R2.49bn in the retailer’s six months to December 27, amid a robust performance from Woolworths Food and its Australian businesses, though the group says the trading outlook is highly uncertain.
“The economic outlook for SA is bleak, with the consumer under significant strain, and the possibility of further waves of infection and delays in the rollout of vaccines likely to further exacerbate the pressure on discretionary spend,” the retail group said.
In Australia, the economic outlook was better, Woolworths said, however the group was “mindful that government initiatives, which have buoyed consumer spend, are coming to an end.”
Turnover rose 5.8% to R39.6bn to December 27, almost half of which was generated by Woolworths Food, whose turnover grew 12.1%.
Woolworths Food remained resilient throughout the reporting period, delivering further volume and market share gains, the group said, with its pricing strategy and the convenience of locations partly responsible.
The performance of Woolworths Fashion, Beauty and Home was disappointing, however, with turnover falling 11.2% to R6.42bn.
Early expectations of a recovery in Australia were short-lived, the group said, with a lockdown imposed in the State of Victoria from August 6 to October 28, which resulted in unplanned store closures.
Turnover grew 5.3% to R8.25bn at David Jones, and 9.4% to R5.97bn at Country Road. In its previous half year, Woolworths had said bushfires in Australia had hurt sales.