Woolworths (WHL) H2 2024 earnings summary

Executive summary

• Group turnover and concession sales rose 4.3% year-on-year to ZAR 76.4 billion, driven by strong Food and Financial Services performance, but offset by weaker results in Fashion, Beauty, and Home (FBH) and Country Road Group (CRG) due to macroeconomic headwinds, especially in Australia.

• Adjusted EBIT declined 14.1% to ZAR 5.8 billion, and adjusted diluted HEPS fell 12.2%, reflecting increased investment and a challenging consumer environment.

• The sale of David Jones was completed, transforming the group’s balance sheet and enabling capital reallocation.

• Robust balance sheet and strong cash generation position the group for future growth.

Financial highlights

• Turnover and concession sales: ZAR 76.4 billion, up 4.3% year-on-year; adjusted EBIT: ZAR 5.8 billion, down 14.1%; adjusted diluted HEPS: 375.4cps, down 12.2%.

• Total dividend for the year was ZAR 2.655 per share, maintaining a 60%-70% payout ratio.

• Free cash flow reached ZAR 2.6 billion; net borrowings at year-end were ZAR 5.6 billion, with a net debt to EBITDA ratio of 1.45x.

• Cash conversion ratio improved to 95%.

Outlook and guidance

• Food sales momentum accelerated in the first eight weeks of FY25, up 13.3% (10.9% excluding Absolute Pets); H1 price movement forecast 5.0%-5.5%.

• FBH margin target remains above 14% in the medium term, with margin gains expected from FY26/27 as value chain transformation benefits materialize.

• CRG EBIT margin guidance revised to above 10% due to loss of shared services synergies post-David Jones separation; first eight weeks trade -11.0%.

• Macro conditions in South Africa are improving, but Australia’s recovery is expected to be slow and protracted.