Woolies earnings seen 8% - 13% higher

If profit from the sale of 50% of its financials services unit is included, HEPS are expected to grow by between 24% and 29% higher.

Group sales for the 26-week period ended December rose 8.1%, but same store sales were virtually unchanged - up by a modest 0.7%.

Woolies, which also operates in Australia, said clothing and general merchandise sales fell 0.6% and comparable store sales in that operation slumped 4.1% with no price inflation for the year.

Woolies food retail sales rose 9.5% but same store sales inched up 0.3% with average food price inflation of 12.1%.

Country Road, the firm's Australian operations, increases sales by 20% in that country's currency terms, and comparable sales increases 12.8%.

"The middle and upper income consumer primarily served by Woolworths SA is being severely impacted by the current economic conditions and is trading down," the group said.

Woolies said it has introduced more competitive opening prices in both foods and clothing.

Tighter control of costs and inventory has assisted in reaching the profitability levels attained.

Woolworths Financial Services closing debtors' books at December 2008 were 2.9% up against December 2007.

It said bad debts were well controlled, with net bad debts (excluding costs of recovery) expressed as a percentage of the gross book at 7.4% compared with 7.1% in December 2007.

Published courtesy of