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Johannesburg - South African fashion, food and homeware group Woolworths Holdings raised its outlook for full-year headline earnings per share on Friday, saying it expected an increase by as much as 30%.
Woolworths said it expected headline earnings and headline EPS - the key profit measure for South African firms which excludes non-trading, capital and certain extraordinary items - to rise by 20-30%.
The group said on July 18 it expected headline EPS to increase by 15-25%.
"The estimated earnings range has increased due to a reduction in our effective tax rate, following the recognition of a deferred tax asset in Country Road Limited," Woolworths said.
In Woolworths' July forecast, the retailer said its Australian unit Country Road - which only accounts for a small part of its total revenue - boosted total sales by 15.9% in Australian dollar terms and by 12.6% in comparable sales when viewed against the previous year.
Benefited from consumer confidence
In the earnings outlook, the retailer said its provision for bad debt rose as higher interest rates made for a tougher debt
collection environment.
Woolworths said its net bad debt provision, as a percentage of its gross book, increased to 7% in the year from 5.5% in the previous financial year.
South African retail companies have benefited from buoyant consumer confidence stoked by a growing black middle class and tax cuts, but analysts are concerned that a string of interest rate hikes from the middle of last year and one this year, could
curb growth.
- Reuters