{"id":26470,"date":"2026-03-04T10:28:14","date_gmt":"2026-03-04T10:28:14","guid":{"rendered":"https:\/\/microvibenews.com\/?p=26470"},"modified":"2026-03-04T10:28:14","modified_gmt":"2026-03-04T10:28:14","slug":"woolworths-delivers-positive-sales-but-profit-margins-under-pressure","status":"publish","type":"post","link":"https:\/\/microvibenews.com\/?p=26470","title":{"rendered":"Woolworths delivers positive sales but profit margins under pressure"},"content":{"rendered":"

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Woolworths Holdings says its gross profit margins in the six months to 28 December 2025 remained under pressure, despite a concerted effort to improve performance.<\/p>\n

It highlights in the release of its latest results on Wednesday that increased promotions to clear excess inventory, long-term capacity investment, and targeted price investment are among a combination of factors that squeezed its gross profit margin to about R2 billion, a reduction of 23%.<\/p>\n

Read: Woolworths warns on Australia, invests in South Africa food unit<\/p>\n

But pressure on margins wasn\u2019t enough to dampen overall performance, with group reporting a 5.4% increase in turnover and concession sales.<\/p>\n

Earlier this year, the group\u2019s management had warned shareholders of an expected decline in earnings for the period under review, primarily driven by a significant base effect from the prior year.<\/p>\n

At the time, management expected total earnings per share (EPS) to drop by as much as 35%. However, in its results release on Wednesday the decline in EPS came slight better at 32.1%, which is the equivalent of 166.6 cents per share.<\/p>\n

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\u201cThe group\u2019s results for the first half of the 2026 financial year reflect the ongoing progress in our various strategic initiatives, with improving performance in our apparel businesses and continued above-market growth in our leading food business,\u201d says Woolworths group CEO Roy Bagattini.<\/p>\n<\/blockquote>\n

\u201cThis is notwithstanding a constrained trading environment across both geographies. In Southern Africa, discretionary spend remains subdued, despite the easing inflationary and interest rate environment, while Australia\u2019s prolonged discounting in a high-cost inflationary environment continues to exert pressure on retail footfall and spend,\u201d he adds.<\/p>\n

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To put a smile on shareholders\u2019 faces, the group has also announced a double-digit dividend increase of 10.3%. This means it will pay an interim dividend of 118 cents per share.<\/p>\n

\"Woolworths<\/p>\n

Source: Moneyweb\/Profile data<\/p>\n<\/div>\n

The group\u2019s share price firmed on the news of a double-digit dividend increase. It traded around 3.5% strong by 11 am SA time.<\/p>\n

Woolies share price<\/strong><\/p>\n

The group\u2019s SA unit delivered above-market turnover and concession sales growth of 6.8% for the period, notwithstanding relatively subdued consumer confidence and spend.<\/p>\n

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Revenue through Woolies Dash jumped 23%, with the online channel now contributing 7.2% to SA Food sales.<\/p>\n<\/blockquote>\n

Bagattini says the successful expansion of the Midrand distribution centre is progressing well, \u201calbeit impacting the near-term gross profit margin given the increased depreciation arising from this significant investment\u201d.<\/p>\n

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Read:\u00a0Woolworths promises no jobs are at risk as it tests self-service till<\/p>\n

Fashion, beauty and home<\/strong><\/p>\n

The group says its fashion, beauty and home unit\u2019s turnover and concession sales increased 6.2%, and by 6.4% on a comparable-store basis.<\/p>\n

This momentum was maintained over Black Friday and the festive season, with sales growth of 6.1% in the last seven weeks of the period, implying encouraging market share gains over the half and positive underlying volume growth.<\/p>\n

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Despite the retail major\u2019s optimism about the times ahead, there are still some concerns about the Australian operations.<\/p>\n<\/blockquote>\n

While the South African macroeconomic environment is showing positive early signs of recovery, Bagattini cautions that inflationary pressures in Australia and the subsequent recent interest rate hike is likely to further weaken consumer confidence in the country, tempering any recovery in Australian retail spend.<\/p>\n

However, recent geopolitical events in the Middle East will increase the degree of uncertainty around the broader global and local macro-outlook.<\/p>\n<\/p><\/div>\n