Tue Oct 25 17:46:55 CAT 2016
Mkhwebane leaves Zuma‚ Van Rooyen interdicts

The new public protector says she will leave the dispute over the state capture report prepared by h.

Retail chain is expecting its earnings to increase, but it cautions against bad debt

By unknown | Jul 19, 2007 | COMMENTS [ 0 ]

Clothing and food retail chain Woolworths Holdings expects full-year headline earnings a share to increase by between 15 and 25percent. But the group warned provision for bad debt had risen as higher interest rates made for a tougher debt collection environment, and its shares fell.

"If they come in on the lower side of that earnings guidance, it will be disappointing," said Renaissance Asset Management head of research Nothando Ndebele, adding growth in bad debts was concerning and was eroding profit.

Headline earnings a share is the key profit measure for South African firms and excludes certain non-trading, capital and extraordinary items.

Woolworths said its net bad debt provision, as a percentage of its gross book, increased to 7,0percent in the year to end June from 5,5percent in the previous financial year.

South African retail companies have benefited from buoyant consumer confidence stoked by a growing black middle class and tax cuts.

But analysts are concerned a string of interest rate hikes from the middle of last year could curb growth.

After Woolworths issued the statement, its shares dropped 1,22percent to R21,92 while the blue chip top-40 index was 0,68percent weaker.

The group said sales for the 52 weeks to end-June rose 22,3percent with food sales showing the biggest increase.

Ndebele said there were strong sales numbers coming through at the group's clothing unit and higher food prices had helped to boost revenues at its food unit.

Its Australian unit Country Road, which only accounts for a small part of Woolworths' total revenues, boosted total sales by 15,9percent in Australian dollar terms and by 12,6 percent in comparable sales when viewed against the year before. - Reuters


Login OR Join up TO COMMENT