By Nqobile Dludla
JOHANNESBURG (Reuters) -South African department store chain Woolworths Holdings Ltd reported a 75.1% jump in mid-year earnings on Wednesday but warned of a slower growth second half impacted by the country’s power crisis.
Brick-and-mortar sales increased substantially in the first half ended Dec. 25, the company said, as shoppers, particularly in Australia, returned after prolonged pandemic lockdowns.
Woolworths, which also operates the Country Road and David Jones chains in Australia, said headline earnings per share (HEPS) rose to 294.5 cents from 168.2 cents a year earlier.
HEPS is the main profit measure in South Africa.
Group turnover and concession sales increased by 18.5% to 49.9 billion rand ($2.73 billion), while profit before tax jumped 63.3% to 3.7 billion rand.
In South Africa, which houses Woolworths’ upmarket grocery, fashion, beauty and home businesses, the retailer grappled with crippling rolling power outages which have reduced its domestic adjusted operating profit by an estimated 15 million rand per month.
Chief Executive Roy Bagattini told investors that Woolworths was incurring about 20 to 30 million rand per month in food waste and diesel costs when power is out for up to 10 hours a day.
The “debilitating” power crisis, constrained consumer demand and normalisation of trade in Australia were likely to result in slower profit growth from continued operations in the second half which began on Dec. 26, Woolworths added.
Bagattini told Reuters that the retailer will ramp up renewable energy back-up power supply at its distribution centres, while working with landlords at shopping malls to move towards renewable energy.
South African state power utility Eskom is implementing the worst rolling blackouts on record, leaving households in the dark for up to 10 hours a day and forcing retailers to crank up diesel generators for hours, which is putting pressure on their margins.
($1 = 18.2735 rand)
(Reporting by Nqobile Dludla; editing by Nivedita Bhattacharjee and Jason Neely)
