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2020-08-17

Woolies expects up to 70% drop in earnings

Woolworths (Woolies) expects its earnings to fall by up to 70percent and will impair the carrying value of certain stores for the 52 weeks to the end of June as the economic fallout of the Covid-19 pandemic weighs heavily on its balance sheet.


Dineo Faku | IOL

The group said on Friday that headline earnings per share (HEPS) would likely fall by up to 70percent to R13.20 from R34.29 a year earlier, and adjusted diluted headline earnings per share would decline by between 40 and 50percent to between R17.82 and R21.38, compared with R35.63 a year earlier. “Covid-19 had a significant impact on the performance of the group in the second half of the financial year, and is expected to continue to do so for at least the remainder of the calendar year, given the fluid and challenging environment,” said the group.

 

Woolies said the Covid-19 pandemic had necessitated an assessment of the carrying values of assets, including the right-of-use assets relating to its store fleet arising from the implementation of International Financial Reporting Standards 16.

“Consequently, the carrying value of certain store assets has been impaired, which in turn will negatively impact reported earnings share,” said Woolies, adding that the impact was adjusted in calculating HEPS and adjusted diluted headline earnings per share for the current year. The lower earnings come as Woolies has embarked on the sale of certain Australian properties to pay off debt. It was also grappling with the failure of David Jones.

BUSINESS REPORT

 


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