Retail group Woolworths says it expects profits to rise by at least a fifth in its year to end-June 2021, as it benefits from a better cost structure for its Australian operations and a recovery from the implementation of strict lockdown conditions in 2020.
Headline earnings per share (HEPS) for the group’s year to end-June 27 is expected to be at least 20% higher than the 119.8c per share reported previously, Woolworths said in a trading update.
In its 2020 year, headline earnings had fallen by almost two-thirds to R1.14bn, with Covid-19 restrictions prompting a sharp fall-off in customers in its stores towards the end of that financial year.
Woolworths, owner of Australian clothing chain David Jones, also announced in late 2020 that it had sold its flagship Elizabeth Street store in Sydney for a maximum of A$510m (R5.6bn at the time) and will remain a tenant in the building for at least 20 years.
During the year it also received the proceeds of A$121m from the disposal of its Bourke Street men’s wear building in Melbourne.
Woolworths has been looking to reduce debt in Australia, which it has struggled with since it bought Australian retailer David Jones in 2014 for about R21bn. It has since written off more than R12bn of its investment.
In its 2021 half-year results, the group had also reported that the renegotiation of various leases resulted in accounting gains of R667m. It said then that it had significantly reduced net debt levels in both SA and Australia.
In morning trade on Thursday, Woolworths’s shares were trading 1.29% higher at R54.11, having risen more than a third in 2021, and 11.34% since the beginning of 2020.
Update: May 20 2021
This article has been updated with share price information.
With Katharine Child
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