Woolworths feels the pain

While Woolworths’ South African food business continues to outperform, its Australian operations are under significant pressure, dragging down the retailer’s earnings for its 2025 financial year.

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

On Thursday, 31 July 2025, the retailer released a trading update for the 52 weeks ended 29 June 2025.

This update showed a disappointing overall performance for the company, with strong turnover and sales growth but flat or lower earnings.

Woolworths’ group turnover and concession sales grew by 6.1% and 6.8% on a constant currency basis.

The retailer said this was achieved despite challenging macroeconomic conditions across both geographies it operates in, and significant uncertainty arising from global trade tensions.

This strong performance was mainly attributable to the company’s local operations, with Woolworths South Africa delivering turnover and sales growth of 9.4% for the year.

As usual, the retailer’s food business was a standout performer, having delivered above-market turnover and sales growth of 11%, and 7.7% on a like-for-like basis.

The retailer said price movement for the period in this segment averaged 5.3%, with positive underlying volume growth driven by increased footfall and average basket size

Excluding Absolute Pets, which was acquired in the fourth quarter of the prior period, Food sales increased by 9.2%.

This segment also expanded over the period, with trading space increasing by 2.4%. 

Woolworths’ on-demand Woolies Dash offering also grew by 41.6%, with overall online sales rising by 32.9% and contributing 6.6% to total food sales.

The retailer also reported a strong performance in its fashion, beauty and home segment, which saw turnover and sales grow by 4.7% and by 5.1% on a comparable store basis.

Woolworths said this growth was driven by improved product availability, as the product flow challenges it faced in the first half of the year were resolved.

A standout performer in this segment was the retailer’s beauty business, which continues to gain market share and delivered growth of 14.7% over the period.

However, the retailer said the trading space for this business was strategically decreased over the period to optimise space efficiency.

Therefore, the retailer is also pushing online sales for this category, which increased by 22.8% and contributed 6.6% to the segment’s total sales.

Australian pain

While Woolworths’ South African operations outperformed, it did not fare as well in its international markets.

The Country Road Group’s (CRG) issues in Australia have been ongoing for years, and saw Woolworths sell its David Jones business for a significant loss in 2023.

Following this separation from David Jones, CRG completed a significant restructure to reconfigure its operating model and reset its structural economics as a standalone business. 

Woolworths said this transformation was undertaken in an accelerated timeframe and within a particularly unconducive macro backdrop, where sustained pressure from high interest rates and living costs continued to impact consumer footfall and spend. 

This challenging environment saw sales for this segment decline by 5.4% for the period and by 6.8% on a comparable-store basis. 

Notably, Woolworths said its Country Road and Trenery brands have continued to trade ahead of the rest of the CRG brands. 

Trading space for this segment decreased by 0.8% in the period, while online sales contributed 28.6% of total sales, up from 27.7% in the prior comparable period.

However, this was not enough to offset the negative impact of this struggling segment on Woolworths’ overall earnings for the period.

The retailer expects its earnings per share for the period to decline by up to 5% or remain flat compared to the prior year.

One significant driver of this disappointing result was a non-cash charge of R917 million, which negatively impacted the reported earnings per share for the period. 

This charge arose after Woolworths reassessed the carrying value of the assets of the underperforming brands within CRG. 

Following this assessment, the R917 million charge impaired the carrying value of the assets of these select brands.

Woolworths’ year-end results are expected to be released on or about 3 September 2025.