"The traditional Woolworths customer is feeling more confident in their spending. They're not in the same place of panic as they were two, three years ago," chief executive officer Simon Susman told I-Net Bridge.
"We've implemented various strategies, that we've worked on for a while to attract customers back to our stores and these have proven successful - we've gained market share and our sales are up," he added.
Earlier on Thursday, Woolworths Holdings reported adjusted diluted headline earnings per share of 159 cents for the year ended June 2010, up from 123.7 cents in 2009. Diluted earnings per share were 157.2 cents for the period under review. The Cape Town-based retailer declared a final dividend of 67 cents per share and a total distribution of 105 cents per ordinary share.
"When you look at like-for-like growth these results are pretty good.
Woolworths seems to be turning around, even if it's off a very low base. The environment is still tough, the other clothing retailers are not having such a jolly time," said a retail analyst.
The group said revenue was at R23.7 billion after R21.9 billion reported in 2009, while operating profit was at R1.7 billion after R1.45 billion a year ago.
One of the interesting things is Woolworth's return on equity, which jumped from 26.3 to 39.4%, mainly due to an improvement in operating margin and a more efficient balance sheet. Woolworth's currently has a 24% foreign shareholding and has outpaced a more than 2% decline in the JSE all-share index, its shares gaining just over 30% this year - making it a hot pick for investors.
According to research firm Nielsen, Woolworth's Food market share at June 2010 was 8.3% and according to the Retailer's Liaison Committee Woolworth's clothing and footwear market share at June 2010 was 15.3%.
"Woolworths has been gaining market share because they seem to be doing better than a lot of the retailers, this might be at the expense of Edcon," said a retail analyst.
Sales at Country Road, Woolworths' Australian unit, rose 8.5% in Australian dollar terms, while operating margins declined to 4.9%, from 6.3%.
"The trading conditions in Australia have been challenging, there have been six interest rate increases during the year and heavy discounting was needed to stimulate customer spending," Woolworths said.
Whether Woolies results are a reflection of a gradual ease in consumer spending or simply because the strategy that Woolworths is driving is working - one thing's for sure - the cow's have come back to graze.
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