Woolworths Stiff upper lip
For the first time in, like, forever, The Dapper One has issued a trading update that is less than rosy. Quite substantially less than rosy, in fact, unless your roses grow in hues of lead and soot. Sales volumes have gone flat across the Group – food, non-food, Australia, the works. Previously, non-food had held up surprisingly well given the investment Woolies and others had made in keeping food prices low. This effect seems now to have run its course, with growth in Clothing and GM of just 2% against space growth of 2.9% and internal inflation of 7%. Food sales were up 9.1%, but trading space increased 8.3%, and inflation was 9.2%: flat, flat, flat. In Australia, growth in retail space at David Jones outstripped sales growth at 2.2%, while sales at Country Road declined -2.8%.
Comment: Given what ails us – zero economic growth, zero job creation and negligible salary increases just to kick off – this inevitable tightening at Woolies should come as no surprise.