Woolworths Holdings Ltd., a South African grocer and clothing retailer, plans to invest in improving the food range at its Australian unit to exploit a lack of organic produce and other pricier items in the country that could appeal to higher earners.
"There is a gap in the Australian food market that no-one is entering," Chief Executive Officer Ian Moirtold reporters in Johannesburg on Tuesday. "The David Jones food offering is not good enough, but we can do it. We can build a supply chain relatively quickly."
The Cape Town-based company bought the David Jones department store chain in Australia for $2 billion in 2014 to diversify away from South Africa, where northern hemisphere retailers have been opening stores and economic growth has slowed. The unit is contributing about 43 per cent to total net income, Moir said at the company’s first-half earnings last week.
Online retail is another part of the business with growth potential, Moir said.
We "see an onslaught on its way in terms of online," the CEO said. "If you don’t have the right approach to digital you will fail. There’s still a lot to do, but we believe all our businesses have got a lot of growth."
Woolworths shares declined 2.9 per cent to 86.52 rand as of 10:51 a.m. in Johannesburg, extending a decline for the calendar year to 14 per cent. That values the company at 83 billion rand ($5.3 billion).
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