director's report - woolworths holdings limited

Group turnover from continuing operations rose by 24.2% to R8 421,4m. Woolworths grew sales
22.6% in the 53 weeks to June to R7 302,0m, compared to a 52 week period last year, with the impact
of the additional week adding approximately 2.3%. Sales on a comparable store basis increased 15.5%
against last year. Consumer spending in South Africa was positive throughout the period with Textiles
sales for the 53 weeks increasing by 17.7% against last year (12.2% on a comparable store basis) and
Food sales by 28.7% against last year (18.7% on a comparable store basis).
Total trading area in Woolworths grew 4.2% to 333 692m 2 as a result of 13 new store openings, which
added 8 800m 2 . Eight stores, totalling 7 150m 2 ,were converted to the franchise format, which now
accounts for 65 002m 2 of the total trading space.Textiles footage now totals 266 635 m 2 (62 119 m 2
franchise) and Foods footage 67 057m 2 (2 883m 2 franchise).
Country Road’s revenue from continuing operations grew by 3% in Australian dollar terms to
A$207m, but translated into 36% growth in rand terms, to R1 125m. After the closure of the USA
operations, Country Road now trades from 44 stores with a total footage of 23 560m 2 .
Gross profit margin in Woolworths, increased marginally to 31.4%, but fell from 52% to 50% in
Country Road due to increased promotional activity to counter significant discounting among
competitors and an unusually warm winter.
Interest received increased 20.6% to R355,5m. R341,7m was earned by Woolworths Financial
Services, with the Woolworths Card growing in line with sales and the personal loan offering showing
strong growth. Growth in income was constrained by the usury rate, which, for several months in the
second half, failed to keep pace with increases in the prime lending rate.
Operating expenses were well managed during the year growing 17.5% in Woolworths, as a result of
increased trading activity, whilst Country Road’s costs in their continuing operations were 5.9% lower
in Australian dollar terms as a result of head office rationalisation following the closure of the USA
operations. Costs were 22.6% up in rand terms.A large portion of the operating costs in Woolworths
are variable, particularly in the Foods business, and move in line with the increase in
sales volumes.
w oolwor t hs
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annual report