Woolworths Holdings Limited · JSE:WHL
Woolworths — FY2023 Earnings Presentation
60 slides from Woolworths's earnings presentation, Aug 1, 2023
Slide 1: Annual Results FY23
WOOLWORT HS HOL DI NG S L I M I T ED A N N UA L R E S U LT S FY23
Slide 2: Presentation Outline
WOOLWORTHS HOLDINGS LIMITED ANNUAL RESULTS 2023 ANALYST PRESENTATION PR ESENTATION OUTLINE 01 02 03 04 OVERVIEW OF FINANCIAL STRATEGIC UPDATE Q&A THE YEAR OVERVIEW AND OUTLOOK
Slide 3: Overview of the Year
WOOLWORTHS HOLDINGS LIMITED ANNUAL RESULTS 2023 ANALYST PRESENTATION OVERVIEW OF THE YEAR Roy Bagattini Group CEO
Slide 4: Overview of the Year
WOOLWORTHS HOLDINGS LIMITED ANNUAL RESULTS 2023 ANALYST PRESENTATION OVERVIEW OF THE YEAR A transformational year for the Group, with significant progress against our strategies delivering both a strong operational and financial result • Strong Group performance notwithstanding ongoing macro headwin
Slide 5: Loadshedding Considerations
WOOLWORTHS HOLDINGS LIMITED ANNUAL RESULTS 2023 ANALYST PRESENTATION LOADSHEDDING CONSIDERATIONS Our Woolies difference has never been more evident than it has throughout loadshedding: the trust our customers place in our brand, our unique supplier partnerships, and the investments we have made in o
Slide 6: WOOLWORTHS HOLDINGS LIMITED ANNUAL RESULTS 2023 ANALYST PRESENTATION
WOOLWORTHS HOLDINGS LIMITED ANNUAL RESULTS 2023 ANALYST PRESENTATION
Slide 7: Sale of David Jones
WOOLWORTHS HOLDINGS LIMITED ANNUAL RESULTS 2023 ANALYST PRESENTATION SALE OF DAVID JONES The sale of David Jones has unlocked significant value for the Group • Sale of David Jones is transformational for our Group • Removed R18bn in liabilities from the balance sheet • Drives a step-change in Group
Slide 8: Highlights of Our Good Business Journey in the Current Year
WOOLWORTHS HOLDINGS LIMITED ANNUAL RESULTS 2023 ANALYST PRESENTATION HIGHLIGHTS OF OUR GBJ IN THE CURRENT YEAR Our pioneering Good Business Journey is embedded in everything we do and is a distinct competitive advantage • Deeply entrenched sustainability programme – investing time, capital and exper
Slide 9: No. 1 Most Valuable Retail Brand
WOOLWORTHS HOLDINGS LIMITED ANNUAL RESULTS 2023 ANALYST PRESENTATION NO. 1 MOST VALUABLE RETAIL BRAND ONE OF THE TOP TEN MOST VALUABLE SOUTH AFRICAN BR ANDS NO. 1 BRAND FOR SUSTAINABILITY 2023 Kantar BrandZ Most Valuable South African Brand awards
Slide 10: Thank You
WOOLWORTHS HOLDINGS LIMITED ANNUAL RESULTS 2023 ANALYST PRESENTATION THANK YOU! to our customers for your loyalty and trust and to our suppliers, our partners, and all our teams throughout the Group, for making our difference exceptional
Slide 11: Financial Overview
WOOLWORTHS HOLDINGS LIMITED ANNUAL RESULTS 2023 ANALYST PRESENTATION FINANCIAL OVERVIEW Zaid Manjra Head of Finance
Slide 12: Financial Overview
WOOLWORTHS HOLDINGS LIMITED ANNUAL RESULTS 2023 ANALYST PRESENTATION FINANCIAL OVERVIEW Strong operational performance with positive leverage throughout the P&L, and accretive benefit of share buybacks TOTAL GROUP Turnover & Adjusted Adjusted diluted concession sales EBIT HEPS +6.9% +21.3% +35.6% To
Slide 13: Financial Overview (Continued)
WOOLWORTHS HOLDINGS LIMITED ANNUAL RESULTS 2023 ANALYST PRESENTATION FINANCIAL OVERVIEW (CONTINUED) Robust balance sheet with step-change in ROCE and lease liabilities, supported by sale of David Jones Net borrowings Lease Net debt / EBITDA (excluding lease liabilities) liabilities R2.5BN WSA net de
Slide 14: Sales Performance for the Year
WOOLWORTHS HOLDINGS LIMITED ANNUAL RESULTS 2023 ANALYST PRESENTATION SALES PERFORMANCE FOR THE YEAR Food momentum accelerated throughout the year | Apparel businesses saw slower H2 trade as a result of headwinds to discretionary spend Rm Rm A$m 14 762 43 292 1 500 16 000 45 000 1 214.5 12 000 30 000
Slide 15: Segmental Adjusted EBIT for the Year – Total Operations
WOOLWORTHS HOLDINGS LIMITED ANNUAL RESULTS 2023 ANALYST PRESENTATION SEGMENTAL ADJUSTED EBIT FOR THE YEAR – TOTAL OPERATIONS Strong Group performance, with aEBIT +21.3% on LY (+24.6% adjusted for loadshedding), driven by strong growth in apparel businesses, with softer growth in Food and lower profi
Slide 16: Segmental Adjusted EBIT for H2 – Continuing Operations
WOOLWORTHS HOLDINGS LIMITED ANNUAL RESULTS 2023 ANALYST PRESENTATION SEGMENTAL ADJUSTED EBIT FOR H2 – CONTINUING OPERATIONS aEBIT +3.3% on LY (+7.8% adjusted for loadshedding); tougher H2, particularly in Australia, exacerbated by high base effects; FBH and Food well ahead of LY Rm 4 000 +3.3% 3 302
Slide 17: Woolworths Fashion, Beauty and Home
WOOLWORTHS HOLDINGS LIMITED ANNUAL RESULTS 2023 ANALYST PRESENTATION WOOLWORTHS FASHION, BEAUTY, AND HOME Significant progress in improving the financial health of our business Trading ahead of market | further improvement in full-price sales and markdown metrics supporting GP margin gains | aEBIT m
Slide 18: Woolworths Food
WOOLWORTHS HOLDINGS LIMITED ANNUAL RESULTS 2023 ANALYST PRESENTATION WOOLWORTHS FOOD Delivering best-in-class ROCE Accelerating trading momentum | GP margin gains notwithstanding loadshedding costs and ongoing price investment | aEBIT margin (excl. loadshedding) ahead of guidance Turnover and Gross
Slide 19: Country Road Group
WOOLWORTHS HOLDINGS LIMITED ANNUAL RESULTS 2023 ANALYST PRESENTATION COUNTRY ROAD GROUP Significant contribution to Group results Strong topline growth | Higher full-price sales and supply chain efficiencies driving GP margin gains | aEBIT margin ahead of medium-term guidance Turnover Gross profit m
Slide 20: Woolworths Financial Services
WOOLWORTHS HOLDINGS LIMITED ANNUAL RESULTS 2023 ANALYST PRESENTATION WOOLWORTHS FINANCIAL SERVICES Increased pressure on consumers has driven a material increase in impairments Strong book growth driven by new accounts and credit card advances | Impairment rate increased to 7.3% of book; remains ind
Slide 21: Impact of Sale of David Jones
WOOLWORTHS HOLDINGS LIMITED ANNUAL RESULTS 2023 ANALYST PRESENTATION IMPACT OF SALE OF DAVID JONES Comparable nine month results • Turnover and concession sales +23.6% on LY to A$1.8bn • GP margin at 35.3%, -0.3ppts on LY • aEBIT +c.369% on LY to A$140.8m • aEBIT margin at 7.7%, +5.7ppts on LY Sale
Slide 22: Capital Expenditure
WOOLWORTHS HOLDINGS LIMITED ANNUAL RESULTS 2023 ANALYST PRESENTATION CAPITAL EXPENDITURE Investing c.R10bn over next 3 years in organic growth and growth-enabling initiatives Investment in capacity and capability throughout the value chain / data, digital and online / store network Rm FY24 Plan 3 60
Slide 23: Group Balance Sheet
WOOLWORTHS HOLDINGS LIMITED ANNUAL RESULTS 2023 ANALYST PRESENTATION GROUP BALANCE SHEET Robust balance sheet, with improved debt metrics supported by sale of David Jones Net borrowings Lease liabilities R2.5BN R11.0BN • Net borrowings increased, including R2.9bn of share buybacks • R18bn of DJ leas
Slide 24: Cash Generation
WOOLWORTHS HOLDINGS LIMITED ANNUAL RESULTS 2023 ANALYST PRESENTATION CASH GENERATION Free cash flow of R3.8bn | working capital increases across all businesses | R3.2bn increase in net gearing after payment of dividends (R2.9bn) and share repurchases of R2.9bn Rm 14 000 12 427 12 000 (1 052) 10 000
Slide 25: Capital Allocation and Returns to Shareholders
WOOLWORTHS HOLDINGS LIMITED ANNUAL RESULTS 2023 ANALYST PRESENTATION CAPITAL ALLOCATION AND RETURNS TO SHAREHOLDERS Our aspirations: Real mid-single digit aEBIT growth ROCE Gearing revenue growth > revenue growth > WACC + 5% < 1.5x What we delivered in FY23: BALANCE SHEET INVESTMENT AND GROWTH SHARE
Slide 26: Recent Trading
WOOLWORTHS HOLDINGS LIMITED ANNUAL RESULTS 2023 ANALYST PRESENTATION RECENT TRADING FBH and Food momentum continuing into FY24 | CRG impacted by pressure on consumer confidence and retail discretionary spend Rm Rm A$m 14 762 43 292 1 500 16 000 45 000 1 214.5 12 000 30 000 1 000 7 447 21 130 22 162
Slide 27: Strategic Update and Outlook
WOOLWORTHS HOLDINGS LIMITED ANNUAL RESULTS 2023 ANALYST PRESENTATION STRATEGIC UPDATE AND OUTLOOK Roy Bagattini Group CEO
Slide 28: Looking Back
WOOLWORTHS HOLDINGS LIMITED ANNUAL RESULTS 2023 ANALYST PRESENTATION LOOKING BACK Delivering on our commitments
Slide 29: Our Strategic Journey and Progress
WOOLWORTHS HOLDINGS LIMITED ANNUAL RESULTS 2023 ANALYST PRESENTATION OUR STRATEGIC JOURNEY AND PROGRESS 1 EVALUATE • Perform a deep diagnosis of the state of the business 2 (strategic, operational, financial) FIX, STRENGTHEN, AND REPOSITION • Define “fix and reposition” plan including metrics to mea
Slide 30: Delivering on Our Commitments Over the Past Years
WOOLWORTHS HOLDINGS LIMITED ANNUAL RESULTS 2023 ANALYST PRESENTATION DELIVERING ON OUR COMMITMENTS OVER THE PAST 3 YEARS LARGEST SHARE BUYBACK SALE OF DAVID JONES IN GROUP HISTORY TRANSFORMATIONAL bought back R3.8bn - 6.6% of shares R18bn of liabilities removed from REDUCED NET GEARING Group balance
Slide 31: Delivering on Our Commitments Over the Past Years
WOOLWORTHS HOLDINGS LIMITED ANNUAL RESULTS 2023 ANALYST PRESENTATION DELIVERING ON OUR COMMITMENTS OVER THE PAST 3 YEARS Full price sales contribution (%) Markdown (% of sales) Trading density (R000’s per m2) aEBIT (ZAR) 82 25 34 DOUBLED 80 20 32 FBH 78 15 30 76 10 28 from 2020 74 5 26 72 0 24 2020
Slide 32: Our Good Business Journey
WOOLWORTHS HOLDINGS LIMITED ANNUAL RESULTS 2023 ANALYST PRESENTATION Going beyond profit, we focus on our social and environmental goals and responsibilities, to create meaningful impact. This is our Good Business Journey. This is our DNA.
Slide 33: Our Strategic Journey and Progress
WOOLWORTHS HOLDINGS LIMITED ANNUAL RESULTS 2023 ANALYST PRESENTATION OUR STRATEGIC JOURNEY AND PROGRESS 1 3 EVALUATE OPTIMISE, INVEST AND GROW • Perform a deep diagnosis of the state of the business 2 • Drive improved operational and (strategic, operational, cost efficiency financial) FIX, STRENGTHE
Slide 34: Looking Ahead
WOOLWORTHS HOLDINGS LIMITED ANNUAL RESULTS 2023 ANALYST PRESENTATION LOOKING A HE A D The next phase of our Investment Thesis
Slide 35: Woolworths Fashion, Beauty and Home
WOOLWORTHS HOLDINGS LIMITED ANNUAL RESULTS 2023 ANALYST PRESENTATION WOOLWORTHS FASHION, BEAUTY AND HOME We have fundamentally shifted the trajectory of our FBH business, and will continue to improve Fashion’s underlying performance, whilst profitably growing Beauty and Home • Continuing to focus on
Slide 36: Woolworths Food
WOOLWORTHS HOLDINGS LIMITED ANNUAL RESULTS 2023 ANALYST PRESENTATION WOOLWORTHS FOOD Whilst we will remain focused on strengthening our “holy grail”, we are simultaneously investing in new avenues of growth which will leverage off our existing and differentiated back-end capability • Significant sco
Slide 37: Country Road Group
WOOLWORTHS HOLDINGS LIMITED ANNUAL RESULTS 2023 ANALYST PRESENTATION COUNTRY ROAD GROUP Country Road Group has significant runway for growth as it continues to leverage its competitive advantages and fulfils an even greater role within the WHL Group • Unlocking the full potential of existing brands
Slide 38: Summary: What This Means for WHL Group
WOOLWORTHS HOLDINGS LIMITED ANNUAL RESULTS 2023 ANALYST PRESENTATION SUMMARY: WHAT THIS MEANS FOR WHL GROUP We are investing in the next phase of our journey, leveraging our strengthened foundations to optimise and grow our businesses • Investing in various organic growth and growth-enabling initiat
Slide 39: Closing Statement on Balance Sheet Firepower
WOOLWORTHS HOLDINGS LIMITED ANNUAL RESULTS 2023 ANALYST PRESENTATION We are in an advantageous position of having already done a lot of the heavy lifting in terms of our balance sheet and foundational profitability. We can now use this firepower to further optimise and grow our businesses to generat
Slide 40: Appendix
WOOLWORTHS HOLDINGS LIMITED ANNUAL RESULTS 2023 ANALYST PRESENTATION APPENDIX
Slide 41: In Summary: Our Plan and Updated Commitments
WOOLWORTHS HOLDINGS LIMITED ANNUAL RESULTS 2023 ANALYST PRESENTATION IN SUMMARY: OUR PLAN AND UPDATED COMMITMENTS Strategically the ...to deliver on our plan achieves... medium-term targets Continued • Revenue growth FY23 aEBIT margin improvement in Fashion aEBIT margin > inflation-plus! FBH 13.2% >
Slide 42: A Reminder: Our Good Business Journey
WOOLWORTHS HOLDINGS LIMITED ANNUAL RESULTS 2023 ANALYST PRESENTATION A REMINDER: OUR GOOD BUSINESS JOURNEY PILLAR 1 PILLAR 2 PILLAR 3 INCLUSIVE JUSTICE ETHICAL AND FAIR THRIVING AND RESILIENT FOCUS AREAS FOCUS AREAS FOCUS AREAS PEOPLE SUSTAINABLE FARMING PACKAGING AND WASTE SOCIAL DEVELOPMENT ETHICA
Slide 43: Appendix Contents
WOOLWORTHS HOLDINGS LIMITED ANNUAL RESULTS 2023 ANALYST PRESENTATION APPENDIX CONTENTS • GROUP PERFORMANCE • GROUP INCOME STATEMENT • GROUP BALANCE SHEET • SEGMENTAL INCOME STATEMENTS • IFRS 16 - IMPACT BY SEGMENT • CAPITAL EXPENDITURE • NET BORROWINGS/(CASH) • AUSTRALIAN BALANCE SHEETS • TRADING SP
Slide 44: Group Performance
WOOLWORTHS HOLDINGS LIMITED ANNUAL RESULTS 2023 ANALYST PRESENTATION GROUP PERFORMANCE Total Group Continuing operations H2 FY H2 FY Turnover and R43.1bn R93.0bn R37.1bn R73.2bn concession sales -3.9% on LY +6.9% on LY +9.2% on LY +10.8% on LY Adjusted profit before tax R2.8bn R6.6bn R2.6bn R5.5bn -
Slide 45: Group Income Statement
WOOLWORTHS HOLDINGS LIMITED ANNUAL RESULTS 2023 ANALYST PRESENTATION GROUP INCOME STATEMENT Strong Group performance from continuing operations, with aEBIT +13.5% on LY Jun 2023 Jun 2022 % Rm Rm change Turnover and concession sales 73 228 66 066 10.8 Gross profit 26 826 23 294 15.2 Positive operatin
Slide 46: Group Balance Sheet
WOOLWORTHS HOLDINGS LIMITED ANNUAL RESULTS 2023 ANALYST PRESENTATION GROUP BALANCE SHEET Further strengthened balance sheet post DJ sale, with improvement in key ratios; net equity at R12bn after dividends (R2.9bn) and share repurchases (R2.9bn) Jun 2023 DJ Jun 2022 Pre sale IFRS 5 Jun 2023 Rm Rm Rm
Slide 47: Woolworths Fashion, Beauty and Home Results
WOOLWORTHS HOLDINGS LIMITED ANNUAL RESULTS 2023 ANALYST PRESENTATION Significant progress in improving the underlying health of our Fashion, Beauty and Home business; trading ahead of the market H2 Full year Full year 2023 H2 2023 2022 % Rm % Rm Rm change Turnover and concession sales 7 315 6.7 14 7
Slide 48: Woolworths Food Results
WOOLWORTHS HOLDINGS LIMITED ANNUAL RESULTS 2023 ANALYST PRESENTATION Impressive sales and margin performance, with strong trade momentum in H2; aEBIT growth impacted by loadshedding H2 Full year Full year 2023 H2 2023 2022 % Rm % Rm Rm change Turnover and concession sales 22 162 9.4 43 292 39 896 8.
Slide 49: Country Road Group Results
WOOLWORTHS HOLDINGS LIMITED ANNUAL RESULTS 2023 ANALYST PRESENTATION Strong full-year results; softened in H2, due to weaker consumer spend H2 Full year Full year 2023 H2 2023 2022 % A$m % A$m A$m change Turnover 591.3 0.6 1 214.5 1 084.2 12.0 Gross profit margin 61.7% 62.6% 59.5% Expenses 307.4 10.
Slide 50: Woolworths Financial Services Results
WOOLWORTHS HOLDINGS LIMITED ANNUAL RESULTS 2023 ANALYST PRESENTATION Good growth; overall result impacted by higher impairments Jun Jun 2023 2022 % Rm Rm change Average total financial services assets 14 831 13 181 12.5 % % Income statement to book to book Net interest income 1 713 11.6 1 402 10.6 2
Slide 51: David Jones Results
WOOLWORTHS HOLDINGS LIMITED ANNUAL RESULTS 2023 ANALYST PRESENTATION David Jones sold in March and disclosed as a discontinued operation 9 months 9 months Full year 2023 2022 % 2022 A$m A$m change A$m Turnover and concession sales 1 825.4 1 476.5 23.6 2 058.1 Gross profit margin 35.3% 35.6% 35.2% Ex
Slide 52: 2023 Group Segmental Income Statement
WOOLWORTHS HOLDINGS LIMITED ANNUAL RESULTS 2023 ANALYST PRESENTATION 2023 GROUP SEGMENTAL INCOME STATEMENT Woolworths Country Road David FBH Food Logistics WFS Group Treasury Jones Intragroup Group Jun 2023 Rm Rm Rm Rm Rm Rm Rm Rm Rm Turnover and concession sales 14 762 43 292 684 – 14 490 – 21 462
Slide 53: 2022 Group Segmental Income Statement
WOOLWORTHS HOLDINGS LIMITED ANNUAL RESULTS 2023 ANALYST PRESENTATION 2022 GROUP SEGMENTAL INCOME STATEMENT Woolworths Country Road David FBH Food Logistics WFS Group Treasury Jones Intragroup Group Jun 2022 Rm Rm Rm Rm Rm Rm Rm Rm Rm Turnover and concession sales 13 550 39 896 637 – 11 983 – 22 776
Slide 54: IFRS 16 – Impact by Segment
WOOLWORTHS HOLDINGS LIMITED ANNUAL RESULTS 2023 ANALYST PRESENTATION IFRS 16 – IMPACT BY SEGMENT Group WSA CRG Lease liabilities Rm Rm A$m Jun 2022 26 784 5 994 338 Jun 2023 11 002 6 491 371 Average remaining lease term (years): Jun 2022 5.1 6.0 2.4 Average remaining lease term (years): Jun 2023 4.5
Slide 55: Capital Expenditure
WOOLWORTHS HOLDINGS LIMITED ANNUAL RESULTS 2023 ANALYST PRESENTATION CAPITAL EXPENDITURE Rm Depreciation and amortisation 3 600 % R3.2bn Jun 2023 Jun 2022 change Woolworths (Rm) 861 965 (10.8) Country Road Group (A$m) 30 27 11.1 R2.5bn 2 400 Continuing operations pre IFRS 16 (Rm) 1 223 1 267 (3.5) R
Slide 56: Net Borrowings/(Cash)
WOOLWORTHS HOLDINGS LIMITED ANNUAL RESULTS 2023 ANALYST PRESENTATION NET BORROWINGS/(CASH) Net borrowings/(cash) Jun 2023 Jun 2022 R4.4bn R3.5bn WHL Net debt/(cash) (Rm) 2 529 (229) Interest-bearing debt 5 825 5 112 Net cash and cash equivalents (3 296) (5 341) Unutilised committed facilities – Grou
Slide 57: Australian Balance Sheets
WOOLWORTHS HOLDINGS LIMITED ANNUAL RESULTS 2023 ANALYST PRESENTATION AUSTRALIAN BALANCE SHEETS Jun 2023 Jun 2022 A$m A$m Country Country Road Osiris Road David Group Holdings Total Group Jones Total Assets Property, plant and equipment and investment property 114 140 254 92 396 488 Intangible assets
Slide 58: Trading Space
WOOLWORTHS HOLDINGS LIMITED ANNUAL RESULTS 2023 ANALYST PRESENTATION TRADING SPACE Projected Projected Projected Jun 2022 % Jun 2023 % Jun 2024 % Jun 2025 % Jun 2026 000m2 change 000m2 change 000m2 change 000m2 change 000m2 Woolworths Fashion, Beauty and Home 433 (0.2) 432 0.2 433 0.5 435 0.7 438 So
Slide 59: Store Locations
WOOLWORTHS HOLDINGS LIMITED ANNUAL RESULTS 2023 ANALYST PRESENTATION STORE LOCATIONS Projected Projected Projected Jun 2022 Growth Jun 2023 Growth Jun 2024 Growth Jun 2025 Growth Jun 2026 Woolworths Fashion, Beauty and Home 257 11 268 12 280 12 292 18 310 South Africa 194 10 204 12 216 9 225 14 239
Slide 60: Disclaimer
WOOLWORTHS HOLDINGS LIMITED ANNUAL RESULTS 2023 ANALYST PRESENTATION DISCLAIMER Shareholders are advised that the information in this presentation has not been reviewed and reported on by Woolworths Holdings’ external auditors and it does not constitute a profit forecast. Woolworths Holdings has tak