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Woolworths 'looks like the best of the lot'

By Adele Shevel | Jan 21, 2010 | COMMENTS [ 0 ]

CLOTHING and food retailer Woolworths yesterday released a trading update, which analysts said was among the better performances from retailers that have released numbers in the past week.

Nedcor Securities analyst Syd Vianello said the update "looks like the best of the lot so far".

Over the past week Massmart, Shoprite, Mr Price, Truworths, Foschini and Clicks released updates, all of which disappointed the market in varying degrees, apart from Clicks.

Analysts had been anticipating an uptick in Woolworths numbers after a tough few years in which several competitors increased market share at the expense of Woolworths.

Woolworths over the past year repositioned itself as providing a value offering in addition to being a retailer aimed at the middle to upper end of the market.

"This seems to be better than what we were anticipating," said Vianello of the numbers. "They've done well."

Figures indicate that market share is rotating.

"People who lost market share in the past are winning back consumers. Edgars is losing market share, which is worrying, while Mr Price is gaining market share," Vianello said.

The food and clothing retailer said it expected a 35percent to 45percent jump in first-half headline earnings a share benefiting from reduced cost of sales.

The group expects earnings a share to drop 15percent to 25percent in the six months ending December.

Group sales increased 9,3percent for the six months ending December compared with a year ago, while comparable store sales growth for the period was 4,4percent.

Absa Investments analyst Chris Gilmour said this was not a bad result relative to other retail figures.

"It's nothing to write home about. The food side keeps on pumping and has been very proactive with promotions. In clothing, they've been getting more focused with more brands but they're intelligently placed."


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