Cape Town: South Africa’s retail heavyweight Woolworths Holdings has projected a significant decline in annual profit, citing weakening performance in its Australian fashion business and a broader downturn in discretionary consumer spending. According to its preliminary financial disclosure for the year ending June 29, 2025, the company anticipates a drop of up to 29% in headline earnings per share (HEPS) a key indicator of operating profit. This would mark a notable retreat from the 364.2 cents reported in the 53-week period ending June 30, 2024.
The biggest blow to Woolworths’ earnings comes from the underperformance of its Australian fashion arm, Country Road Group. The brand has struggled with declining consumer demand and market saturation in a competitive retail landscape. Compounding this challenge is a non-cash impairment charge of approximately 917 million South African rand (around 51 million US dollars), stemming from a revaluation of brand assets in the Country Road portfolio. Though this impairment does not impact HEPS directly, it underscores the broader strain on Woolworths’ fashion business.
This sharp revision in profit expectations follows an earlier warning issued by the company during its half-year earnings announcement in January, when it flagged a 22–27% expected decline due to soft clothing sales across key markets including South Africa, Australia, and New Zealand. The full-year update now reveals the downturn has not only persisted but deepened, particularly in the premium apparel and home segments.
Despite the challenges facing its fashion divisions, Woolworths’ food segment continues to deliver consistent growth. The company reported a 5.7% rise in overall group turnover to 40.3 billion rand for the fiscal year, largely driven by the performance of its South African food operations. Grocery sales, bolstered by increased footfall and price resilience, remain a strong pillar in an otherwise uneven earnings profile.
The clothing and home unit, however, has experienced both declining margins and shrinking market share. In the first half of fiscal year 2025, gross profit margin for fashion products declined by 170 basis points to 46.3%. The company attributes this pressure to both external economic headwinds and internal challenges in stock management, branding, and pricing strategy. The Country Road Group in Australia and New Zealand also reported a 6.2% drop in sales during the same period.
In a bid to stabilize its performance, Woolworths is undertaking a restructuring initiative within its fashion operations. This includes refining its product offerings, refreshing store formats, and reassessing market positioning, especially in its overseas brands. However, the impact of these strategic measures is likely to materialize only in the medium term, and recovery will depend heavily on shifts in consumer sentiment and broader economic conditions.
Looking ahead, Woolworths must walk a tightrope between protecting shareholder value and reinvesting in core segments under stress. With inflationary pressures, subdued retail confidence, and stiff competition on both domestic and international fronts, the group’s path to sustained profitability remains complex. Nonetheless, its food business offers a solid foundation, and if corrective measures in fashion succeed, Woolworths may yet restore its standing as a balanced and resilient retail force.
The company is expected to release its final audited results by the end of August 2025, at which point the full financial picture including dividends, strategic outlook, and updated forecasts will become clearer to investors and market analysts.