Picture: FINANCIAL MAIL
Picture: FINANCIAL MAIL

RETAILER Woolworths reported a 21% rise in first-half profit chiefly as a result of contributions from its recent acquisition in Australia.

Woolworths said headline earnings per share (HEPS) totalled 164.2c in the six months to end-December compared with 135.7c a year earlier.

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

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

Woolworths said total sales rose 18% to R16.7bn, with its Australian business delivering a 55.6% 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 concern that consumers are too heavily indebted to sustain recent levels of sales growth.

Woolworths is expected to fare better than rivals such as Truworths and Shoprite as it serves 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 on Thursday.

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

Reuters