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South Africa’s Woolworths Reaps Big From David Jones Acquisition

South Africa’s Woolworths Reaps Big From David Jones Acquisition

South African retailer Woolworths posted a remarkable jump in earning for it financial year ending June, helped up by its Australian acquisition in David Jones.

Woolworths, which acquired David Jones in August last year for $2 billion, said its Group sales jumped 54.9 percent during the year to 58 billion rand ($4.4 billion) for the year to June. Excluding David Jones sales, the retailer’s sale were only up 12 percent.

This increase in sales, where were its strongest in eight years, helped it post a 20.4 percent jump in pretax profit. Before its Acquisition, David Jones profit has dipped for four consecutive years.

“This year has been transformational for our Group with the acquisition of David Jones and the full ownership of Country Road Group enabling us to make a step change in the scale of our operations: transforming it into a quality retailer with significant scale across sub-Saharan Africa and Australasia,” Woolworths Group Chief Executive, Ian Moir, said in a statement emailed to AFKInsider.

“This is a strong set of results, particularly considering the amount of change the Group has undergone due to our new investment in Australia and the tough trading conditions that prevailed in both our major markets.”

Woolworths said it will pay a dividend of 2.47 rands per share, up from 2.40 rands in the previous financial year. The company’s shares have climbed 28 percent this year, making it the best performing retailer on the Johannesburg Stock Exchange, Bloomberg reported.

South African based retailers have been facing tough times as unemployment in the country rose to 25 percent as power shortages and rising inflation stifled consumer spending.

Moir forecasts that the economic condition in the company’s main markets South Africa and Australia could be tough in coming months, “especially in the lower and middle-income segments”.

“The upper-income segments in which we operate continue to show some resilience. Trading for the first eight weeks of the new financial year has been positive,” he said.