A breakdown of the group’s sales by division show firm growth in its Food segment, marginal growth in clothing and merchandise and a contraction within the David Jones and Country Road divisions. The group has attributed the poor performance in the latter divisions mentioned above to the timing of “Boxing Day” which will only see the sales contributions thereof reflect in the second half of the 2017 financial year. The termination of the Dick Smith electronics concession also weighed on the sales performance of the David Jones division.
The Financial Services debt book showed growth of 2.3% year on year, although the annualised impairment rate for the period increased from 4.8% to 5.9%.
Comments
The Food division remains the standout segment within the Woolworths group, providing a bit more of a defensive hedge in weak consumer environment than those retailers predominantly apparel focused would. Markets will be looking within the upcoming results to see the group’s progress and plans for the David Jones Food rollout in Australia, for which some of the recent property sales cash is being allocated for, as this is seen as a possible catalyst for future growth within the company.
A key deliverable investors will be looking at would be, the company’s progress towards driving synergies and efficiencies across the group particularly that between Woolworths SA (WSA), David Jones and Country Road, the latter of which saw cost of sales in FY16 more than double that of WSA.
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