FOOD and clothing retailer Woolworths on Thursday reported a 28.1% rise in diluted headline earnings per share to 333.8c for the 53 weeks ended June. Turnover was up 23.2% to R35.2bn.
The board declared a cash dividend of 148c per share.
Woolworths said strong sales growth in the first half of the year continued into the second half despite the pressure on South African consumers.
The inclusion in the second quarter of Witchery, the group’s Australian acquisition, further boosted sales.
Sales growth was leveraged by improved gross margins in both the South African and Australian clothing businesses, benefiting from improved sourcing and delivering group profit before tax growth of 27.1%.
Return on equity (excluding goodwill) increased from 50.3% at June 24 2012 to 58.7% at June 30 2013.
The impact of the additional week in the year under review added 2% to earnings.
Woolworths said it expected economic conditions in South Africa to remain constrained, especially in the lower- and middle-income segments of the market, where consumer debt levels remain under pressure.
Trading for the first eight weeks of the new financial year has been in line with expectations both in South Africa and Australia, it added.
As a retailer focusing on higher-income groups, Woolworths is in a better position than some other retailers, as there is relative strength and confidence at the high end because of the very low rate cycle, Noah Capital Markets analyst Roger Tejwani said this week.
Woolworths CEO Ian Moir expects the upper-income consumer to remain resilient.
"For the next three to five years, LSM 8-10 growth is forecast at 5% plus. There are not many markets that are achieving that level of growth. The South African consumer is becoming wealthier … people are coming to us," Mr Moir said at a forum at the Gordon Institute of Business Science last week.