By Nqobile Dludla
JOHANNESBURG (Reuters) -South African retailer Woolworths said it was banking on a revamped Australian fashion chain and a recovering domestic clothing business to fuel growth in 2026 after reporting a 23.9% drop in full-year earnings.
Group Chief Executive Roy Bagattini told investors on Wednesday the retailer had completed the restructuring of its Australian Country Road Group as a standalone business.
This involved cutting costs and introducing fresh design collections under the Witchery and Trenery brands.
Country Road, grappling with heavy discounting across the sector and low discretionary spend, hammered the group’s headline earnings per share, which fell to 268.1 South African cents in the 52 weeks ended June 29.
Bagattini said the repositioning of the Australian brands was gaining traction, with Witchery now delivering double-digit sales growth.
“With the solid foundation we’ve now established, both structurally and strategically, and with new leadership in place, we have what it takes to deliver a much improved result from financial year 2026 onwards,” he said.
In South Africa, Woolworths has implemented the turnaround of its fashion business, which has significantly improved product assortment and availability, he said.
“We are delivering the strongest like-for-like sales growth in the sector and momentum continues to build into the new financial year,” Bagattini said.
Woolworths is also investing in kidswear, baby, beauty and homeware, by introducing expanded ranges and allocating more store space for these categories.
While kidswear, baby and beauty have lower gross profit margins, Bagattini said they will help drive footfall and overall basket size in the department stores.
“Customers who shop kidswear spend on average six times more across the fashion, beauty and home business,” he said.
As a result of focusing more on lower margin categories, Woolworths has lowered the adjusted EBIT margin target for its fashion, beauty and home business to greater than 12% from greater than 14%.
($1 = 17.5632 rand, 1.5389 Australian dollars)
(Reporting by Nqobile Dludla; Editing by Sonali Paul, Jamie Freed, Philippa Fletcher)
