Our opinion on the current state of WHL

The sad fall of the Woolworths share (WHL) price was occasioned by the decision of previous CEO, Ian Moir, and his board to buy David Jones in Australia for AU$2,1bn which has now had R12bn written off its original purchase price of R20bn in 2014. The only aspect sustaining the Woolworths group was its food sales. Woollies announced on 14th January 2020 that they had appointed Roy Bagattini, from Levi Strauss, to replace Ian Moir as Group CEO with effect from 17th February 2020. Woolies fashion and clothing section was also not doing that well in a very difficult trading environment. In its results for the 53 weeks to 25th June 2023 the company reported turnover up 7% and headline earnings per share (HEPS) up 29%. The company said, "Turnover and concession sales from continuing operations (i.e. excluding David Jones) increased by 10.8% for the year and by 9.3% in comparable stores. Sales grew by 9.2% in the second half of the year ('H2' or 'half'). Online sales grew by 9.3%." On 31st October 2023 the company announced that it had acquired 93,45% of Absolute Pets for cash. Absolute Pets has over 150 stores throughout South Africa. In a report on the 20 weeks to 12th November 2023 the company reported turnover up 4,7% in constant currencies. The company said, "Group turnover and concession sales on a total basis (including the contribution of David Jones in the prior period, which is therefore non-comparable) decreased by 22.4% on the prior period." In a trading statement for the 26 weeks to 24th December 2023 the company estimated that HEPS from continuing operations would fall by between 5% and 10%. During the period, the company's turnover in constant currencies increased by 4,4%. The company said, "In South Africa, our business operations were further disrupted by higher levels of loadshedding, congestion at the ports, and the impact of Avian flu on the availability of key food product lines." We recommended that you consider Woolies shares when they broke up through its long-term downward trendline. This occurred on 4th May 2021 at a price of 4927c. It has since recovered to 6497c. The current P:E is around 12,62 and the share still appears to have upside potential.