Woolworths expects earnings boost after David Jones sale

Woolworths informed shareholders today that it expects its earnings per share for the 2023 financial year to increase by up to 40%.

The retailer released a trading update this morning regarding the 52 weeks ended 25 June 2023, wherein it provided the expected ranges for the change in total group earnings for the period.

This update follows another trading statement released on 28 July, wherein Woolworths informed shareholders that it expects its earnings per share for the total group to increase by more than 20%.

Today, the retailer said it expects the following changes to its total group earnings for the period, compared to its 2022 financial year ended 26 June 2022:

• Earnings per share (EPS) – 30% to 40% increase
• Headline earnings per share (HEPS) – 25% to 35% increase
• Adjusted HEPS – 30% to 40% increase

This significant earnings increase comes on the back of Woolworths’ legal completion of the sale of David Jones, which was concluded on 27 March 2023.

“Accordingly, David Jones will be reported as a discontinued operation in the group’s full-year results,” the retailer said.

“Given this, coupled with the impact of government-imposed lockdowns in Australia in the first half of the prior year, the group’s results for the 52 weeks ended 25 June 2023 are therefore not directly comparable to the 52 weeks ended 26 June 2022.”

Therefore, the retailer also provided its expectations for increases in earnings from continuing operations compared to the previous year:

• EPS – 10% to 20% increase
• HEPS – 10% to 20% increase
• Adjusted HEPS – 10% to 20% increase

In the trading update in July, Woolworths said South Africa’s load-shedding affected its local fresh food business and resulted in increased waste and a higher overall cost of doing business.

In Australia and New Zealand, the retailer saw a strong first-half result, but this momentum decelerated in the second half as the impact of sustained increases in interest rates and higher costs of living weighed on consumer confidence and discretionary retail spend.