Woolworths shares tank after profit warning

Woolworths’ share price dropped by as much as 9% after the retailer warned that its earnings are set to be far lower than the previous year’s.

The retailer released a SENS announcement this morning ahead of the upcoming release of its results for the 53 weeks ending 30 June 2024.

Woolworths warned investors that its earnings per share, headline earnings per share and adjusted diluted headline earnings per share are expected to be more than 20% lower than the figures reported for the prior year.

The retailer explained that this is in part due to the inclusion of its disposed David Jones business and the profit on the disposal in the company’s 2023 results.

It also noted that the disposal of its David Jones operations during the third quarter of the company’s 2023 financial year means that its upcoming results won’t be directly comparable to those of the previous year.

“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,” the retailer said. 

“Management had also advised that the group was well positioned to benefit from any cyclical consumer recovery.” 

However, it said trading conditions in the second half to date have proven tougher than expected for its apparel businesses, with further deterioration in footfall and discretionary spending in both geographies.

In addition, whilst costs remain well controlled across the company, the impact of a weaker top-line environment is resulting in continued negative operational leverage in its apparel businesses. 

In Australia, the Country Road Group is being further impacted by inflated import costs due to a weaker Australian dollar, coupled with higher fixed costs. 

However, Woolworths’ food business continues to prove its resilience, with strong trade and market share gains.

The retailer said it will issue a further trading statement in order to provide specific guidance on the expected results. Woolworths’ results for the year should be released on or about 4 September 2024.

The retailer’s shares opened at R58.90 this morning and fell to R54.63 in the morning. While the share price has recovered slightly since the massive fall, it is still down over 6% at the time of publication.


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