Mixed fortunes for Woolworths, but Woolies Food continues to shine

Stephen Grootes is joined by Roy Bagattini, Group CEO of Woolworths Holdings.

Woolworths Holdings has slashed its interim dividend by more than 25% amid economic conditions still constraining consumer spend.

Announcing its results for the half year to 29 December 2024, the group said its food division delivered another outstanding performance while the apparel businesses are still in the midst of turnaround.

While group turnover and concession sales increased 5.7% to R40.3 billion, headline earnings per share (HEPS) dropped almost 25% to 152.8 cents a share. Woolworths cut its dividend by over 27% to R1.07.

CEO Roy Bagattini said their world-class food business remained the engine room for value creation, as they build the foundational capabilities their apparel businesses need to drive long-term sustainable growth.

“I have every confidence in the outcomes this will achieve, given our clear strategies, trusted brands, key competitive advantages, and the dedication of our committed teams”.

Roy Bagattini, Group CEO - Woolworths Holdings

In conversation with Stephen Grootes, Bagattini notes that while their clothing businesses were operating in a constrained consumer environment in both Australia and South Africa, locally they lost revenue primarily because of inventory problems causing delays at their distribution centre.

"It was the inability for us to get product out of our distribution centre and into our stores at what was a critical time over the festive season that really cost us some top line. That is resolved now."

Roy Bagattini, Group CEO - Woolworths Holdings

With reference to the continued strong performance by their food business, Bagatting explained why Woolies' reported inflation figures are higher than some competitors. 

The retailer's mix of products reflects higher inflation in key categories where they have high market share, like coffee, chocolate and produce.

Where they have seen prices drop is in commodity lines which are heavily maize- or rice-based, and form bigger components of their competitors' baskets.

"Also, we're selling more of our product at full price, so that's really testament to the value our customers see in our product."

Roy Bagattini, Group CEO - Woolworths Holdings

What is important, he emphasizes, is that Woolworths Food is not lifting prices, but continuing to invest in price.

That strategy has fundamentally shifted perception in the market around their overall value proposition, Bagattini says.

"In fact, when we look at our customers, we've increased our base by over 8% during the period, which is a phenomenal number. It speaks again to the value and the trust I think customers put in our proposition."

Roy Bagattini, Group CEO - Woolworths Holdings

For more detail, listen to the interview audio at the top of the article