Friday, August 30, 2013

Wollies shoppers still splash out

Woolies shoppers still splash out

Cape Town - “We find the market is moving to us. We understand who we are and will stick to that,” said Ian Moir, CEO of Woolworths[JSE:WHL] after the company released it latest results on Thursday.

"The 27.3% increase in full-year profit is encouraging. It is not just based on one thing, though."

Woolworths had good growth in sales in clothing and market share gains in food sales were well above market.

It has been very profitable in South Africa and its acquisition in Australia and its financial services section have contributed as well.

Moir said the bulk of Woolworths business still very clearly evolves around the LSM 8 to 10 income groups.

High income consumers continue to splash out on upscale groceries and apparel.

“We saw consistent sales growth and do not see an impact of the economic situation on our customers at the moment,” said Moir.

Food sales were up 15.4% and Moir credits the company’s strategy of expanding its options and offering more bulk. The promotional and rewards programmes also worked well.

“We have grown our market share each month since September 2011, because we have the right offering for LSM 8 to 10,” he said.

“So we shall continue to expand our catalogue, open more stores and offer more promotions and price cuts. Woolies is a lot about quality and innovation with regard to prepared foods and we want to make sure we own the fresh side of the market.”

As for future plans, Moir said the company will look at opportunities as they arise.

"The rest of Africa will become an increasing power in our business," said Moir.

He is excited about growth in other African countries like Namibia, Botswana and Kenia. Sub Sahara Africa and the Southern Hemisphere remain the company’s focus.

As for challenges, Moir said these are very much what businesses are facing in general at the moment. It includes changes in the rand, increasing competition, especially in the clothing sector, and the difficulty of doing business in Africa.