Woolworths Holdings Limited (South Africa) has reported a drop in its earnings per share (EPS), with the company citing a weaker-than-expected performance at its Country Road Group subsidiary.
This is despite sales improving for the Australian fashion house in the fourth quarter of FY25 when sales fell just 0.3 per cent, compared to a drop of 4.5 per cent in the second half, 5.4 per cent for the full-year and 6.8 per cent on a comparable-store basis.
Alongside this, WHL added that it had undertaken a reassessment of the carrying value of the assets of the underperforming brands within Country Road Group – including Country Road, Trenery, Witchery, Mimco and Politix.
Ragtrader reported last year that the group’s Politix brand had a R609 million (~$50 million) non-cash impairment of goodwill in FY24, driving down WHL’s earnings per share by 34.1 per cent to 227.3cps in FY24.
The latest trading update by WHL confirmed that the carrying value of “select brands” under Country Road Group has been impaired by a non-cash charge of R917 million (~A$78.3 million) in FY25. This has led to a drop in EPS again to around 263.4cps.
“Following its successful separation from David Jones, CRG completed a significant restructure during the period to reconfigure its operating model and reset its structural economics as a standalone business,” WHL reported.
“This transformation was undertaken in an accelerated timeframe and within a particularly unconducive macro backdrop, whereby sustained pressure from high interest rates and living costs continued to impact consumer footfall and spend.”
WHL added that the Country Road and Trenery brands under CRG have continued to trade ahead of the rest of the brands in the portfolio. The South African group also noted that CRG’s trading space decreased by 0.8 per cent, while online sales contributed 28.6 per cent of total sales for the period, up from 27.7 per cent in the prior comparable period.
“The impact of a weaker topline environment, coupled with diluted gross profit margins as a result of inflated import costs and increased discounting, amplified the degree of negative operational leverage in CRG's second half, in turn significantly impacting [WHL’s] overall result for the period.”
Group turnover and concession sales for WHL overall increased by 6.1 per cent and by 6.8 per cent on a constant currency basis for the full year, and by 6.4 per cent and 7.3 per cent in the comparable second half.
This was driven by its Woolworths South Africa department store chain, which delivered turnover and concession sales growth of 9.4 per cent for the period, with H2 growth of 9.8 per cent.
Woolworths South Africa contributes the largest share of sales to WHL’s overall revenue, at around 70 per cent, compared to Country Road Group.