Woolworths Holdings Ltd. plans to expand its South African food unit after the sale of Australia’s oldest department store chain, David Jones, removed about 18 billion rand ($969 million) in liabilities.
(Bloomberg) — Woolworths Holdings Ltd. plans to expand its South African food unit after the sale of Australia’s oldest department store chain, David Jones, removed about 18 billion rand ($969 million) in liabilities.
The Cape Town-based retailer is opening more outlets that sell ready-to-eat items and more cafés, Chief Executive Officer Roy Bagattini said in an interview on Wednesday. It’s also looking at other quick-service food options and will dedicate more space to its liquor business, he said.
The David Jones disposal has allowed management to spend more time on the core South African fashion and food businesses. Woolworths earlier beat analysts’ estimates with a full-year dividend of 3.13 rand a share, an increase of 36% on a year earlier. Food sales, which contribute about half of revenue, climbed 6.3%.
Read: Woolworths FY Dividend per Share Beats Estimates (1)
Margins at its local clothing unit also improved as Woolworths sourced more items locally and cut the number of lines offered. Bagattini expects to simplify the offering further in its bigger stores as well as open smaller local outlets that focus on clothes curated for that specific neighborhood.
The proceeds from David Jones have also been used to recently complete Woolworths’ biggest share buyback of almost 7% of its shares and more purchases “remain an option,” he said.
“We’ve seen the benefit of that,” he said. “Some of it has played through into these results, but frankly from a timing perspective, a lot of the buyback happened toward the back end of our financial year, so we should see some of that flow through into this current financial year as well.”
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