Woolworths headache continues

Woolworths reported a mixed performance for the first half of its 2025 financial year, as the retailer’s food business is booming, but its other segments proved to be a significant headache.

Woolworths is one of South Africa’s largest food retailers, but also has a Fashion, Beauty and Home business, as well as a Financial Services segment. The retailer also has an Australian business, Country Road Group.

Woolworths reported its results for the 26 weeks ended 29 December 2025 on Wednesday, 5 March 2025.

The retailer reported turnover growth of 5.4% to R39.6 billion, supported by a strong performance in its Food business.

The company’s operating profit from core trading activities fell by 13.3%, but its profit for the period grew by 20.9% to R2.2 billion.

This significant difference between the two profit metrics is due to a once-off gain Woolworths made on the sale of a Melbourne property for R2.6 billion.

This sale boosted the company’s earnings, which grew by 20.9% to 245.4 cents per share.

A lower tax expense, down 35.7%, in the 26-week period also boosted the retailer’s profit.

Therefore, when looking at Woolworths’ core operations, the business’ performance declined. This is largely attributable to a subdued performance in the company’s non-food segments.

Woolworths’ Food business reported a strong performance with 11.4% turnover growth and an improved gross profit margin of 24.9%.

In addition, the retailer’s on-demand grocery delivery service, Woolies Dash, saw sales increase by 49.2% and total online sales for Food rise by 37.2%.

However, the retailer’s other segments performed very poorly in comparison to the Food business’ impressive growth.

Fashion, Beauty and Home reported only 2% turnover growth, which Woolworths attributed to supply chain disruptions affecting product availability.

The Country Road Group, which operates in Australia and New Zealand, saw its sales decline by 6.2%, which the segment’s adjusted operating profit dropping by 71.7%.

The retailer said this is due to weak consumer demand. It explained the apparel trading environment in Australia and New Zealand remains significantly constrained, characterised by reduced footfall and spending and intense promotional activity.

Woolworths said the Country Road Group is currently undergoing a significant restructuring to reconfigure its operating model and reset its structural economics as a standalone business. 

“This restructuring is being implemented in an accelerated timeframe,” the retailer said.

Woolworths is no stranger to burning money in Australia. In 2015, it invested around R29 billion in David Jones, entirely funded by debt.

The David Jones acquisition formed part of Woolworths’ strategy to expand its operations beyond South Africa and increase its international footprint.

Woolworths planned to become a leading apparel retailer in the southern hemisphere, and buying David Jones was a first step toward this goal.

However, it did not work as planned. The investment was a huge failure. After years of disappointing performances, Woolworths sold David Jones for around R1.6 billion.

Now, even after the David Jones business is sold, the Country Road Group continues to struggle and weigh on Woolworths’ results.

Looking forward, Woolworths said, notwithstanding signs of improving consumer confidence across both geographies, recent positions taken by the US regarding global trade relations have elevated its forecast risk. 

Specifically, the retailer said risks are heightened with regard to the macro-economic outlook for the current year, particularly in the case of South Africa.

Whilst Australia has seen a gradual recovery in GDP growth, alongside easing monetary policy that is expected, the retail sector is likely to remain highly promotional until such time as the pressures of living costs ease. 

“During the second half of the financial year, we will undertake a reassessment of the carrying value of the assets of our underperforming brands within the Country Road Group,” the retailer said. 

“This exercise will give due consideration to the macroeconomic environment, our strategic plans and our reset operating model.”

Woolworths said despite the challenges in both its geographic, it is confident in its ability to achieve its strategic objectives and believes the company is well-positioned to benefit from any cyclical recovery in consumer spending.

Woolworths’ board declared a dividend of 107 cents per share for this interim period, down 27.7% from the previous year.