Woolworths geared for a comeback

Woolworths has seen a stronger start to its 2026 financial year, as a restructuring of its Australian operations is starting to bear fruit.

Woolworths is one of South Africa’s biggest retailers, and also has operations in Australia and New Zealand, where it trades as the Country Road Group.

Over the past few years, the Country Road Group has struggled significantly, as Australia’s subdued consumer environment weighed on the business.

In the company’s 2025 financial year, the Country Road Group made a loss before tax of R1.89 billion, and dragged on the strong performance of Woolworths’ South African business.

To address this, Woolworths completed a significant restructuring of its Australian business in 2025, focused on improving the performance of underperforming brands.

On Wednesday, 12 November, Woolworths released a trading update for the 19 weeks ended 9 November 2025, which showed a stronger start to its 2026 financial year.

On a group level, turnover and concession sales grew by 6.2%, or 6.8% on a constant currency basis.

This growth was mainly driven by a 7.4% increase in turnover and concession sales for Woolworths South Africa.

The strongest performer in this segment, the Food business, grew sales by 7.7%, or 6% on a comparable store basis.

The retailer explained that price movement in this segment has been steadily declining and averaged 4.6% for the period, while trading space increased by 4.8% compared to the prior period.

The company also received a boost from its on-demand Woolies Dash offering, which grew by 24.2% and now contributes 7.3% of its South African food sales.

Woolworths South Africa’s Fashion, Beauty and Home business also saw strong growth, with turnover and concession sales up by 6.2%, or 6.6% on a comparable store basis.

This segment recorded price movement of 3.3% over the period, incorporating Fashion inflation of 2.2%.

While the division saw positive underlying volume growth and higher sell-through rates, its trading space decreased by a further 1.8% as part of Woolworths’ ongoing efforts to optimise space and efficiency.

Woolworths South Africa’s Financial Service book decreased by 2% on a year-to-year basis, but increased by 1.5% when excluding the sale of part of the legal book.

The retailer’s annualised impairment rate for the four months through October 2025 increased marginally to 6.7%.

Woolworths saw a more subdued, though still positive, performance in its Australian operations, with the Country Road Group increasing sales by 3.3%, or 3.9% on a comparable store basis.

The retailer said that, with the exception of its Mimco business, all brands are trading ahead of last year.

It attributed this to the repositioning of underperforming brands and the successful restructuring of the Country Road Group’s operating model. 

Woolworths added that the group’s net trading space and online sales contribution remained broadly unchanged compared to the prior comparable period.

Sales growth in the retailer’s Australian business is a welcome turnaround, as the Country Road Group recorded a 5.4% decline in sales for the 2025 financial year.

Positively, Woolworths said trading conditions in Australia and New Zealand appear to be gradually improving, although it noted that the retail sector remains challenging and highly promotionally driven.

Woolworths will release a further trading update in mid-January 2026, following the festive season trade.