JOHANNESBURG (Reuters) – South African department stores chain Woolworths Holdings flagged a small fall in annual sales after its non-food stores were shut in the second-half of its financial year due to COVID-19 lockdowns.
Even before the global health crisis, South African brick-and-mortar retailers were struggling with weak consumer spending amid slowing wages growth, high utility costs and high unemployment. The pandemic has compounded these problems.
Woolworths, which also operates in Australia, said group sales for the 52 weeks ended June 28 fell 0.1% compared with a year earlier. In constant currency terms, sales declined 1.1%.
The sales performance for the second half was hit also by a drop in customer numbers as they limited trips to malls and shopping centres, with some opting just to shop online.
This pushed online food sales for the South Africa business up by 87.8%, while Woolworths Fashion, Beauty and Home online sales grew by 41.3% during the second half.
For the full year, Woolworths food sales jumped 10.7% while fashion, beauty and home sales declined 10.7 as shoppers prioritised essentials.
“To stimulate trade and manage inventory levels throughout this period, management executed a series of focused promotional and clearance initiatives targeted at generating and preserving cash,” the firm said in its trading update.
“While this negatively impacted gross profit margin, it has resulted in better inventory levels and an improved working capital and net gearing position at year-end.”
In Australasia, sales in upmarket department store David Jones fell 6.3% over the year, while sales in Country Road Group declined 14.3%. Online turnover in both businesses jumped 100.7% and 28.1% respectively in the second half.
South Africa’s retail sales plunged by a record 50.4% in April and by 12% in May, data showed on Wednesday, in the latest evidence of the impact of the early, stricter phase of the country’s coronavirus lockdown.