High-end food and clothes retailer Woolworths reported an improvement in SA clothing sales in its 2022 financial year, showing the strategy to fix the apparel division may be working, even as its food business lagged behind its peers.
In SA, the fashion, beauty and home division grew full-year sales by 5.4% in the 52 weeks to June 26 with same-store sales up 7.3%, despite trading space falling 4.5%, in line with the company’s plan to reduce rental costs.
The clothing business had been losing market share and sales, prompting CEO Roy Bagattini, who joined in 2020, to enact a plan to fix it. He started by cutting ranges, adding more focus, hiring a new head and reducing the overemphasis on female formal wear. He stated that Woolworths intended to shift from reliance on promotions to sell clothes.
In its second half, full-priced sales grew 8.8%, supported by its new winter ranges, market share gains in certain categories, and a stronger performance from the rest of Africa.
The group said that price movement averaged 6% for the year. As it has reduced the use of markdowns to sell goods, its fashion and clothing choices are hitting the mark with consumers.
Woolworths’ star performer, the food business, grew turnover 4.2% off a higher base, but lagged its peers, with Pick n Pay’s 18-week update reporting 10.5% growth in food sales and Shoprite saying on Tuesday that core grocery sales in SA grew just over 10% in its year to July 3.
Woolworths said the lower increase in food sales can be partly explained by its customers eating out more compared with during the lockdown periods.
Online grocery sales, which increased 45.4%, accounted for 3.2% of SA sales, driven by the continued rollout of Woolworths’ on-demand online offering, Dash.
In its 18 weeks to July 3, Pick n Pay saw an almost 100% increase in online sales, reflecting the intense competition between grocers.
Woolworths was affected by lockdowns in its first half in Australia, closing 70% of its stores there, leading to a subdued overall 1.4% growth for the year.
All businesses benefited from a second-half improvement, the retailer said but Australian clothing chain David Jones remained an underperformer, with full-year turnover falling 2.6%. This could amplify calls by some investment analysts for Woolworths to sell David Jones.
Also in Australia, Country Road grew sales 9%, and 11.3% for comparable stores, with a strong performance driven primarily by the Country Road, Trenery and Politix brands.
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