Woolworths | Keeping up with the (David) Jones's
WHL's exposure to the department store model dilutes its strong positioning in the Premium Food and Basic Clothing markets. While Management is confident in the strategic plans to turnaround David Jones, we believe that the structural headwinds, recent management changes and weak Australian retail environment increases the risk of disruption to revenue growth, margins and earnings. David Jones' reduction in profits contributed to 70% of the decline in earnings in H1'19.The following factors will impact the Outlook for the group:
High execution risk at David Jones due to CEO departure, ongoing transformation initiatives and the structural decline of the department store model.
Succession planning for the Group as a whole with the lack of retail talent on the board and management changes at CRG, David Jones and WHL-Clothing. In addition, two senior Australian non-executive directors resigned earlier this year.
Fashion risk at the WHL-Clothing/GM, given the Group's history of underperformance. There have been early signs of improvement in the product offer. However, the seasonal nature of products can impact performance over the next 12 months.
Maintaining growth momentum at WHL-Food and CRG which are key contributors to growth and cash flow.
Woolworths Holdings is a retail company. Co.'s divisions include: Woolworths South Africa, David Jones (DJ), and Country Road Group (CRG). The Woolworths South Africa division is a retailer offering private label products. Co.'s offering include a range of clothing and general merchandise, food products, and financial services. The DJ division is a premium department stores. Co.'s offering include a range of private label brands in women's-wear, men's-wear, shoes, accessories, beauty, children's-wear, home furnishings, general merchandise and food as well as financial services. The CRG division is an apparel retailer. Co.'s offering include apparel, accessories, footwear and home-ware.
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