Woolworths HEPS up 17 per cent - CNBC Africa

Woolworths HEPS up 17 per cent

Earnings

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Woolworth food store

Earnings per share also increased by 17 per cent to 191.2 cents.

Profit before tax increased by 21.1 per cent. Headline earnings increased by 18.5 per cent impacted by an increase in Country Road's minority interest and a higher BEE preference dividend as the group's BEE employee incentive scheme entered its seventh year.

The net impact of unrealised foreign exchange losses of R54 million (Dec 2012: R16 million) and last year's R43 million store restructuring and R52 million Witchery transaction and integration costs (all stated before tax) results in an increase in  adjusted headline earnings per share ("aHEPS") of 12.9 per cent.

Clothing and General Merchandise sales grew by 9.7 per cent, with a price movement of 3.8 per cent. Clothing sales grew by 10.1 per cent with a price movement of 4.4 per cent.

“Clothing sales in comparable stores grew by 8.0 per cent. General merchandise grew by 6.9 per cent and by 5.1 per cent in comparable stores. Gross profit margin in Clothing and General Merchandise contracted 0.4 per cent to 45.7 per cent with a higher investment in entry price points and in-season promotions,” Woolworth said in a statement

Adjusted profit before tax grew 7.4 per cent and return on sales was down 18.5 per cent (18.9 per cent in the prior period).

Food sales grew by 15.3 per cent with a price movement of 7.2 per cent. Sales in comparable stores grew by 11.8 per cent. Gross profit margin reduced by 0.2 per cent to 25.2 per cent as a result of investment in price and increased promotions. Adjusted profit before tax grew 16.0 per cent and return on sales improved 0.1 per cent to 6.2 per cent.

Store costs increased 9.4 per cent with the addition of 3.5 per cent of net footage. Other operating costs (excluding the impact of unrealised foreign exchange movements and last year's restructuring costs) grew by 16.0 per cent, mainly due to the phasing of the comparable period cost base where costs had been deferred into the second half of the year.

Woolworth said with the inclusion of the Witchery Group for the full period (compared to one quarter in the prior period), sales increased 27.5 per cent in Australian dollar terms. Sales in comparable stores increased 5.5 per cent and net space (excluding the acquisition) increased by 4.2 per cent.

Gross margin improved from 61.3 per cent to 63.0 per cent as a result of improved sourcing as well as the contribution of the higher margin Witchery business. Operating costs were well controlled resulting in a 50.0 per cent increase in adjusted profit before tax from A$34 million to A$51 million.

Return on sales (adjusted) increased to 12.6 per cent from 10.6 per cent in the prior period. Return on equity increased from 28.5 per cent to 34.6 per cent.

The retailer declared an interim gross cash dividend of 101.0 cents (85.85 cents net of dividend withholding tax) per ordinary share for the 26 weeks ended 29 December 2013. The company said the dividend had been declared from income reserves and a dividend withholding tax of 15 per cent  will be applicable to all shareholders who are not exempt. The company has no STC credits to be utilised to offset the 15 per cent dividend withholding tax.


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