* Retailers see changing demand amid coronavirus crisis
* Sales recover as COVID-19 restrictions lifted
* Revenues in South Africa fashion unit fell in period
* Overall revenues helped by food, Australia and New Zealand (Adds quotes from fashion MD)
By Nqobile Dludla
JOHANNESBURG, Feb 25 (Reuters) - South African retailer Woolworths (ASX: WOW ) WHLJ.J said on Thursday it was expanding its casual and sports leisure wear ranges to reduce reliance on formal wear, after reporting a rise in half-year profit for the first time since 2015.
The company aims to tap stronger demand for casual and sportswear as the coronavirus pandemic has accelerated a shift to working from home.
Clothes' retailers have recently struggled to keep up with the change in consumer preference as they battle a drop in footfalls in malls and shopping centres.
"There's clearly a need for us to be more relevant in both style and trend but we're not aspiring to be a high fashion or fast fashion business," Manie Maritz, managing director of the group's fashion, beauty and home business in South Africa, said.
Woolworths, which also operates in Australia and New Zealand, announced in September a strategic review of its fashion business in its home business, which the firm says has been plagued by poor execution of fashion ranges and a lack of understanding of its customers. approach resulted in customers that were confused or felt that our proposition did not resonate and consequently left the brand," Maritz added.
To fix this, Woolworths launched a more extensive sports leisure wear range in 18 stores this month and is adding more casual wear ranges in womenswear and menswear.
The group is also ending its Studio.W and WCollection clothing ranges, Maritz said, adding that Woolworths will also add selective third-party brands to its stable of private label brands.
"From a financial point of view, what you're going to see is an improvement in gross margin, growth in full-price sales, a reduction in markdowns and also reduction in space and hopefully driving up improved turnovers and trading densities," he said.
Woolworths' fashion, beauty and homeware business in South Africa, where the group makes 62% of its revenues, saw sales drop 11.2% in the 26 weeks to Dec. 27, hit by a significant decrease in Black Friday spending and the reduction in formal wear trade.
Food sales rose 10.9% in South Africa, where Woolworths has now seen market share growth in that segment for 10 consecutive years, Group Chief Executive Roy Bagattini said.
Overall group turnover and concession sales rose by 5.3% in the first half, recovering from a 4% decline in the second half of its financial year to June 28, thanks also to smaller sales declines in David Jones and Country Road Group in Australia and New Zealand.
The retailer, which last month had flagged the jump in profit, said first-half headline earnings per share (HEPS), the main gauge of profit in South Africa, surged by 58.3% to 261.1 cents. Adjusted diluted HEPS, which strips out certain items, rose by 19.4%.
($1 = 14.4760 rand )
Add Chart to Comment
We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:
- Enrich the conversation
- Stay focused and on track. Only post material that’s relevant to the topic being discussed.
- Be respectful. Even negative opinions can be framed positively and diplomatically.
- Use standard writing style. Include punctuation and upper and lower cases.
- NOTE: Spam and/or promotional messages and links within a comment will be removed
- Avoid profanity, slander or personal attacks directed at an author or another user.
- Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
- Only English comments will be allowed.
Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.