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Australian department store group David Jones continues to be a drag on Woolworths' performance, with a sales decline of 2.6% for the year to 26 June 2022.
In South Africa, sales at Woolworth's food business grew by 4.2%, the company announced in a trading statement. As the pandemic subsided, more people were eating out, while low price hikes in some products also weighed on sales growth.
But Woolworths Food saw a 45% increase in online sales driven in part by its new Woolies Dash delivery service. Online sales contributed 3.2% to sales in its South African food division.
The Fashion Beauty Home (FBH) business saw 5.4% sales growth for the year, despite its trading space shrinking by 4.5%. Online sales grew by 13%, contributing almost 4.5% of South Africa's sales.
In total, Woolworths' group sales grew by 1.4% compared to the previous year. In its 2021 financial year, sales grew by 9.7%.
The market was disappointed by the update, with its share price 1.4% lower in early trading on Monday. Woolworths shares are flat compared to a year ago.
The JSE-listed retailer has been working hard to turn around its David Jones business since buying it in 2014 for more than R21 billion. Over the years, David Jones has proven to be a thorn on Woolworths side, resulting in write-downs and losses for the group. Of late, pandemic-related lockdowns have hurt that business.
Earlier this year, an Australian publication reported that the South African retailer was in talks with banks to sell the department store. Woolworths would not be drawn into commenting on the brand's fate, save to say that it is focused on its turnaround.
The company continued optimising space at David Jones in Australia and New Zealand, reducing its space by almost 3% for the year. David Jones saw an increase of 28.7% in its online sales.
Its other Australian business performed better, with sales of Country Road Group jumping by 9% in the last half of the year, bringing its total sales growth for the year to 3% - despite an 8% reduction in trading space.
"This result was driven primarily by a strong performance from the Country Road, Trenery and Politix brands, following the successful launch of new ranges and the ongoing focus on brand and product positioning," Woolworths said. Online sales contributed almost 32% of total sales.
Woolworths will release its annual results by 31 August.