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 regard to the recent civil unrest the company said, "Eleven Woolworths stores have been looted and severely damaged with nine of the eleven stores in KZN and two in Gauteng". In its results for the 26 weeks to 25th December 2022 the company reported turnover up 15% and headline earnings per share (HEPS) up 75,1%. The company said, "Trade during this period is not directly comparable to that of last year due to the impact of government-imposed lockdowns in Australia in the prior period base. Group turnover and concession sales increased by 8.8% during the last six weeks of the half, which is directly comparable to that of the prior period, underpinned by strong Black Friday and festive season trade". In a trading statement for the 52 weeks to 25th June 2023 the company estimated that HEPS would increase by between 25% and 35%. The company said, "The WHL Group disposed of its David Jones operations, effective 27 March 2023, being the end of the third quarter of the Group’s 2023 financial year. 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". We recommended that you consider the share when it broke up through its long-term downward trendline. This occurred on 4th May 2021 at a price of 4927c. It has since recovered to 7660c. The current P:E is around 14,58 and the share still appears to have good upside potential.