South African retailer Woolworths said it expected annual earnings to be more than 20% lower than the prior year, partly impacted by the sale of its David Jones business and consumers cutting down on discretionary spending.
Retailers such as Woolworths have been grappling with challenging trading conditions at a time cash-strapped customers rein in spending amid high interest rates and living costs.
In a trading update, Woolworths, which also operates in Australia, said trading conditions in the second half to date have been tougher than expected for its apparel businesses.
Challenging Outlook
'At the time of releasing our interim results, our outlook for the second half of the 2024 financial year was expected to remain challenging, considering the continued pressure on consumer disposable income from high interest rates and living costs, it said in a statement.
'Management had also advised that the group was well positioned to benefit from any cyclical consumer recovery. Trading conditions in the second half to-date have, however, proven tougher than expected for our apparel businesses, with further deterioration in footfall and discretionary spend in both geographies.'
The food, fashion and beauty products retailer said its Country Road Group business in Australia was being further impacted by inflated import costs due to a weaker currency, coupled with higher fixed costs.
Food 'Resilient'
The company, however, said its food business continued to 'prove its resilience, with strong trade and market share gains underpinned by the ongoing investment in innovation and our value proposition'.
The group's fun year results are expected to be published on or around 4 September 2024.
Additional reporting by ESM
