S.Africa's Woolworths lifts H1 profit, outlook positive

Reuters
(Blank Headline Received)
A man leaves a Woolworths shop in Sandton, northern Johannesburg, January 28, 2009. REUTERS/Siphiwe Sibeko

JOHANNESBURG (Reuters) - South African retailer Woolworths Holdings Ltd reported a 21 percent rise in first-half profit chiefly as a result of contributions from its recent acquisition in Australia.

Woolworths, which sells food and clothes, said headline earnings per share totalled 164.2 cents in the six months to end-December compared with 135.7 a year earlier.

Headline EPS, the primary measure of profit in South Africa, strips out certain one-time items.

The results were boosted Woolworths' purchase last August of Australian fashion retailer Witchery Group in a $181 million deal to expand into the Asia-Pacific region.

Woolworths, similar in style and products to Britain's Marks & Spencer Group Plc said total sales rose 18 percent to 16.7 billion rand with its Australian business delivering a 55.6 percent surge in sales.

South African retailers have been popular among investors for more than a year due to the credit-led shopping spree, but their shares have tumbled in recent weeks on growing worries consumers are too heavily indebted to sustain recent levels of sales growth.

Woolworths is expected to fare better than rivals such as Truworths International Ltd and Shoprite Holdings Ltd as it serves the more resilient high-income consumers in Africa's biggest economy.

"We expect sales growth to be broadly in line with the first half," the company said in a statement.

Shares in Woolworths are down about 7 percent so far this year, largely in line with the broad sell-off of local retailers but underperforming a near 5 percent gain on the blue-chip JSE Top-40 index.