Woolworths Holdings reported adjusted diluted headline earnings per share growth of 0.7% to 170.3 cents for the 26 weeks to February 28, 2026, in very tough trading environments in South Africa. and Australia.
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Woolworths Holdings' gross profit margins are under pressure in the weak trading environment, despite progress in various strategic initiatives.
Its financial results for the six months to February 28 showed the food business continuing to show above-market growth, and the apparel business and Country Road Group (CRG) in Australia reporting improved performances.
The share price gained 1,7% on the JSE Wednesday morning to R52,16, a price little changed from R53,32 a year before.
Discretionary spending remains weak in Southern Africa despite easing inflation and lower interest rates. In Australia, discounting in a high-cost inflationary environment is exerting pressure on retail footfall and spend.
The group however reported above-inflation turnover and concession sales growth of 5,4%, and 6,1% on a constant currency basis.
Woolworths South Africa reported turnover growth of 6,8% following positive sales and profit growth in all divisions.
However, “gross profit margins came under pressure due to long-term capacity investment, price investments, stronger growth of lower margin channels and categories, and increased promotions to clear excess inventory in the apparel businesses,” the directors said in a statement.
Profit growth was also constrained by the strength of the rand, and weaker currencies in some African markets where the group operates. Net space increased by 4.3%.
Adjusted earnings before interest and tax, depreciation and amortisation (aEBITDA) increased by 3,2% to R4,6bn, reflecting the impact of the investment in various growth-enabling initiatives. Adjusted diluted earnings per share increased by 3,8% to 170 cents per share.
Some 6.9 million shares were bought back at an average R51,23 each. The interim dividend increased by 10,3% to 118 cents per share.
Woolworths Food saw turnover and concession sales growth of 7% and 5,2% on a comparable-store basis, and “consistent month-on-month market share gains,” the directors said.
They said this was due to their “expertise in food science and technology, best-in-class cold chain, unrivalled quality, innovation, and sustainability credentials – which continues to set the Foods operation apart."
Revenue through Woolies Dash, the on-demand platform, grew by 23%, with the online channel contributing 7,2% to SA Food sales. The business now also makes Woolworths Food shoppable until midnight in more than 70 locations.
Impacting operating profit growth was the expansion of the Midrand distribution centre (DC), which was well progressed, and other expenses from investments in growth initiatives. aEBITDA, however, increased by 7%, in line with topline growth.
The Fashion Beauty and Home (FBH) segment saw sales growth of 6.2% and 6.4%, respectively, and market share gains, supported by better product availability.
This was largely due to investments in value chain initiatives. Home and Beauty delivered strong sales growth of 14% and 8.9%, respectively.
But gross profit margin was impacted by price investment in Kidswear and the clearance of excess inventory emanating from the prior period’s DC transition.
FBH’s aEBITDA increased by 4.5% to R1.2bn. Excluding the impact of forex, aEBITDA would have been 6.7% higher.
The Woolworths Financial Services (WFS) book increased by 1.8% on a year-on-year basis to the end of December 2025, and increased by 2.6% when excluding the sale of part of the legal book.
This was a focus on quality growth through new accounts and credit limit increases on existing accounts.
The Country Road Group (CRG) in Australia benefitted from the repositioning of the brand portfolio and the restructuring of its operating model.
CRG’s sales grew by 2.3%, but profit margin was under pressure due to higher promotional activity and initiatives to clear excess stock. Adjusted operating profit of A$14.8m was 4.2% higher..
Woolworths said that while the South African macroeconomic environment is showing positive early signs of recovery, inflationary pressures in Australia and the subsequent recent interest rate hike are likely to further weaken consumer confidence in the country, tempering any recovery in Australian retail spend. The directors anticipate an improved group performance in the second half.
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