Woolworths profit falls on weak Country Road chain

On a comparable basis, headline earnings per share (HEPS) fell to 268.1 South African cents in the 52 weeks ended 29 June.

Group adjusted earnings before interest, tax and amortization (aEBITDA) declined by 3.8% to R8.7bn ($495.35m), but beat average analyst estimates of R7.6bn, according to LSEG data.

"In Country Road Group, the impact of a weaker and highly-promotional topline environment, coupled with diluted gross profit margins, amplified the degree of negative operational leverage in the second half," Woolworths said in a statement.

This impacted the group's overall financial performance in the period, it added.

The Country Road fashion chain, which operates in Australia and New Zealand, reported a sales decline of 5.4%. Its gross profit margin declined by 390 basis points to 56.4% due to the high promotional activity dominating the sector and the weaker Australian dollar inflating input costs, Woolworths said.

While costs were well-controlled, the other factors resulted in Country Road's aEBITDA falling 41.1% to A$103.9m ($67.51m), the company added.

Group turnover and concession sales rose by 6.1% to R81bn, buoyed by the food business, which the retailer said delivered above-market performance, with sales growth of 11% and 7.7% on a comparable-store basis.

Fashion, beauty and home sales in South Africa rose by 4.7% on improved product availability.

Woolworths declared a final dividend of 81 South African cents per share, down 31.1% from the prior year.