Woolworths sales pick up

Johannesburg - South African food and clothing retailer Woolworths said on Wednesday full-year adjusted earnings rose as sales improved and said it would consider share buybacks after spending R316.6m buying its own shares.

Woolworths reported headline earnings per share (EPS) - the main profit gauge in South Africa - for the year to end June fell 4.9% to 109.3c.

The company said adjusted headline EPS rose 13.9% to 993.5c. It said earnings had also been helped by a one-off profit of R380m from the sale of its stake in Woolworths Financial Services.

Woolworths said it has returned cash to shareholders through a special dividend of R750m and open market share repurchases of R316.6m.

"We remain with a strong balance sheet and consequently further share repurchases will be considered," said the company in a statement.

The company said the difference between EPS and diluted EPS was due to the impact of outstanding options under the group share incentive schemes and preference shares issued in terms of the black economic empowerment employee share ownership scheme.

South African retailers have been struggling as downturn crimps consumer spending as the country battles the first recession since 1992. Woolworths has especially been hit hard as its largely middle class customer base opts for cheaper product offerings.

Rival retailer Shoprite, which caters for a more price sensitive market, reported a jump in full-year profit on Tuesday, but warned of a tough year ahead as recession bites in the region's largest economy.

However, retailers have gained some relief with the lower interest rates at 7.0% and inflation which has slowed to 6.9%, easing the pressure on consumers who have been watching their wallets.

- Reuters