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Woolworths takes new hit against Australian arm David Jones

Aug 01 2019 11:27
John Bowker

Woolworths wrote down the value of its Australian department-store chain for a second time as the South African retail group’s ill-fated expansion continues to sour.

The weak performance of David Jones has resulted in an impairment charge of A$437.4 million ($299 million), Cape Town-based Woolworths said Thursday. That brings write-offs at the Australian business to about A$1.15 billion following a similar downgrade in January last year.

The shares fell 2.7% to R53.52 in early trade in Johannesburg, turning a slight gain for the year into a decline.

Woolworths bought David Jones in 2014 with the aim of creating a Southern Hemisphere retail giant and diversifying beyond a sluggish trading environment at home. The plan has been hit by a series of setbacks, piling pressure on Chief Executive Officer Ian Moir. On top of the latest hit, the company also said it would take a A$22.4 million charge related to onerous leases.

Woolworths said it expects to report a loss-per-share for a second year of between R0.92 and R1.29. Headline earnings-per-share, excluding the latest write-down, will be somewhere between a 3.5% decline and a 1.5% gain.

No further commentary was provided on Woolworth’s main South Africa business, which specialises in upmarket food and clothing, following an earlier trading statement released last month.

That showed that the fashion, beauty and home division returned to growth in the second half of the fiscal year, while food sales rose 8.4% over the same period. The full results will be published on August 29.

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