Woolies feels the difference


Shoprite stealthily built a strategy around the humble lettuce, years ago, declaring "anything fresher is still growing". Do you remember THAT Checkers ad? Yeah, we all scoffed. 

 

No one could beat Woolworths superior quality and customers happily paid a premium for their groceries.

 

Fast forward to this morning, when I opened up Woolworths’ trading update and for the 26 weeks ended 26 December 2021 HEPS is expected to plummet between -30% to -40%. 

 

Woolworths Food is struggling to attain its high margins by absorbing price increases as it states, "Sales in comparable stores grew 2.8% with price movement of 2.6% and underlying inflation of 3.7%".

 

Woolworths FBH business "grew turnover and concession sales by 4.2% and by 4.7% in comparable stores". Don't get too excited... this was off a low base. Trading momentum has since slowed the last six weeks and looks like their athleisure merchandise was a big miss with their female consumers. 

 

The Australian business is still proving to be a massive migraine, as sales continue to decline, due to prolonged lockdowns.

 

One cannot ignore that Woolworths has been indifferent and out of touch of their customer's needs for the longest time allowing the competitors to woo them away.... a complacency that has made a difference to the bottom line. 

 

In conclusion, would I still buy Woolworths shares? If it goes under 50 bucks, I will definitely consider it ...as I think about the humble lettuce.   



    

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