South African retailer Woolworths Holdings (WHLJ.J), opens new tab reported a 24.8% fall in first-half profit on Wednesday and said it will reassess the value of the assets of underperforming brands in its Australian fashion business.
In Australia, high interest rates and elevated living costs continue to weigh on consumer discretionary spending, resulting in more in-store promotions and significantly reduced profitability at a sector level, Woolworths said.
As a result, during the second half of its financial year, Woolworths will reassess the carrying value of the assets of its underperforming brands within the Country Road Group.
“The macroeconomic environment has been extremely challenging for retailers and brands all round and one has to take a view on how that might change, when will that start to improve and what will that do to your brands and their relative performance,” CEO Roy Bagattini told Reuters.
The retailer said sales in Country Road declined by 6.2% in the 26 weeks ended December 29, 2024, while adjusted operating profit decreased by 71.7% to 14.2 million Australian dollars ($8.91 million).
Its headline earnings per share fell to 152.8 South African cents.
Group adjusted earnings before interest and tax declined by 13.7% to 2.8 billion rand ($151.62 million), hit by softer-than-expected topline growth in its clothing businesses, coupled with pressure on gross profit margins and increased operating expenditure.
Group turnover and concession sales rose by 5.7% to 40.3 billion rand, buoyed by the food business, which delivered sales growth of 11.4%.
Fashion, beauty and home sales in South Africa rose by 2.5%, held back in part by temporary delays in product flow arising from late supplier deliveries, as well as processes and system changes in its distribution centre.
REUTERS