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Johannesburg - Woolworths Holdings [JSE:WHL] shares were up
sharply on Friday morning on the back of the retailer’s “solid” full-year
results‚ released on Thursday‚ a trader said.
At 11:38am the shares were up more than 5%‚ trading at
R59.55 – a record high since its shares started trading on the bourse in
October 1997.
“This is on the back of the results. There is also a lot of
prospective growth for Woolies. They have their eye on the various African
countries as well‚” a local equities trader said.
On Thursday‚ the Cape Town-based group said diluted headline
earnings per share were 260.6c‚ slightly beating a 256.8c estimate in an I-Net
Bridge poll of analysts.
Sales at Woolworths’ food business grew 11.9% for the year
and 7.8% on a comparable stores basis.
Clothing and general merchandise sales grew by 11.6% over
the period under review. But this includes the added lift of franchise
conversions.
During the year‚ Woolworths acquired a further 34 South
African franchise stores at a cost of R405m.
The group decided in 2010 to buy out its franchisees. It
said on Thursday that the remaining 16 franchise stores would be acquired over
the next seven years as the franchise agreements expire.
Shares to the value of R286m were repurchased during the
year and shares to the value of R358m were purchased to settle employee share
schemes that became payable during the year‚ the company said.
The group's return on equity increased from 44.1% to 47.1%.
CEO Ian Moir said Woolworths would expand its African
footprint‚ adding eight new stores in locations like Nigeria and Mauritius over
the next year.
Growing political stability and sound economic policies have
seen the continent become a mecca for retailers in search of higher yields.
The Economist Intelligence Unit predicts that by 2030‚
Africa’s top 18 cities could have a combined spending power of US$1.3 trillion.
Africa contributes a relatively small percentage to the
Woolworths business‚ at about 3% of turnover‚ but Mr Moir reckons that in five
to seven years it might be 10%.
By 12:50pm Woolworths shares were trading at R59.43.
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