Trading Day – Woolworths is rocking

Woolworths expects a substantial increase in earnings, mostly due to a recovery from Australian Covid lockdowns.

Its trading statement for the half-year period ending in December revealed the retailer expects earnings per share (EPS) to be more than 20% higher than last year.

Spar Group saw a slight decline in earnings. Revenue grew 6% to R135.6 billion, while the group added 41 net new stores.

US markets were up as the S&P 500 closed 0.9% higher, and the Nasdaq climbed 1.5%.

The Nikkei 225 is still relatively flat in early morning trade, climbing only 0.2%, while the Hang Seng index dropped 1.1%.

In the US, Walmart far exceeded earnings estimates, helped by inflation and higher prices. Earnings per share (EPS) for the quarter were $1.50.

Here is the biggest news of the day.

• Spar Group sees a slight decline in earnings despite growing revenue and stores. Earnings per share (EPS) for the year ended in September declined 5% to R11.18. Revenue grew by 6% to R135.6 billion. 65% of the revenue is attributable to Spar Southern Africa. Poland is the only segment making an operating loss of R403 million, while Ireland has the highest operating profit margin. The group managed to add 41 net new stores. Spar declared a final cash dividend of R2.25 per share, bringing the total dividend for the year to R4.00, less than half that of last year.

• Woolworths expects a substantial increase in earnings, mostly due to a recovery from Australian Covid lockdowns. The company released a trading statement for the half-year period (26 weeks) ending in December, forecasting that they expect earnings per share (EPS) to be more than 20% higher than last year. For the past 20 weeks, Woolworths saw sales increase by 23%. In Australia and New Zealand, David Jones experienced a 55% increase in sales, while Country Road saw a 36% increase.

• PPC’s margins are under pressure due to difficult markets in South Africa and Botswana and increased energy costs. The company expects earnings per share to decline from 53 cents last year to a loss of under 5 cents per share. Group EBITDA for the half-year that ended in September declined 23% to R728 million. PPC managed to still reduce net debt by R332 million over the period to R677 million. To maintain sales volumes in SA and Botswana, price increases were limited to 5%. Revenue grew by 4% despite a slight decline in volumes, but higher energy costs eroded margins from 18.7% to 12.2%.

• Inflation lifts Walmart’s earnings. Earnings per share for the quarter were $1.50, beating analyst estimates of $1.32. Revenue was a whopping $152.8 billion, also beating estimates of $147.8 billion. The company’s share price climbed 6.5% on the news. Walmart CFO, John David Rainey, noted that (customer) “Pocketbooks are stretched. People have less discretionary income or less disposable income to spend on things — and so they’re looking for value.”