analyst presentation - Woolworths Holdings Limited

’16
WOOLWORTHS HOLDINGS LIMITED / 2016 INTER IM R ESULTS
WHL / 1
PRESENTATION
OUTLINE
REVIEW OF THE PERIOD
FINANCIAL REVIEW
STRATEGIC FOCUS
OUTLOOK
WHL / 2
REVIEW
O F TH E PERI O D
IAN MO I R
WHL / 3
BUILDING A LEADING SOUTHERN HEMISPHERE RETAILER
With Woolworths, David Jones and Country Road Group we
have a strong position across the southern hemisphere through
• Common seasonality
• Using scale and global sourcing opportunities to deliver more
competitive pricing for our customers
• Building on the design and procurement capability established
in Woolworths
• Leveraging systems, processes and structures to improve efficiency
and productivity
WHL / 4
DIVERSIFIED EARNINGS BASE
OPERATING PROFIT BY SEGMENT (Rm)
OPERATING
PROFIT
BY GEOGRAPHY
43%
57%
Australasia
Africa
H1 2016
3%
H1 2015
22%
OPERATING
PROFIT
BY CATEGORY
H1 2014
-
500
1000
2000
2500
Woolworths
Clothing & GM
Woolworths Food**
David Jones**
Country Road Group
* 50% of PAT
** Turnover and concession sales
WHL / 5
1500
3000
3500
4000
75%
4500
Woolworths
Financial Services*
14%
TURNOVER
BY SEGMENT
30%
20%
36%
Group Clothing & GM
WFS*
Food
GROUP PERFORMANCE
• Much improved performance in Clothing
• Another above market performance from Food
• Good performance from WFS continues
• David Jones delivering well ahead of expectations
• Country Road Group ahead of market despite
underperformance of Country Road womenswear
• Turnover and concession sales up 17.1%
– up 12.3% excluding David Jones
• Adjusted profit before tax up 16.5%
WHL / 6
• Clothing sales in South Africa (including Country Road Group brands)
up 11.7%, with comparable sales up 8.0%
– Good performance by all divisions and brands
– Good turnaround in kidswear due to improved value and design
• Grew market share in highly competitive market
• Gross profit margin increased from 47.3% to 48.1%
• Operating margin of 17.9% (vs 17.6% in H1 2015 and 15.9% in H2 2015)
• Operating profit up 14.6%
WHL / 7
• Strong performance well ahead of the market,
with total sales up 12.1% (up 11.7% excluding
concession sales) and comparable sales up 5.8%
• Growth ahead of the market continues
• Gross profit margin increased from 25.2% to 25.4%
due to more profitable promotions
• O perating margin increased from 6.7% to 7.1% and
operating profit up 17.6%
WHL / 8
WHL
OVERVIEW IAN MOIR 8
WOOLWORTHS HOLDINGS LIMITED
FOOD TURNOVER GROWTH
Food - Woolworths
market
(3mma)
Woolworths vsvs
market
growthgrowth
(3mma)
18%
16%
14%
12%
10%
8%
6%
4%
2%
WHL / 9
15
De
c+
5
+1
ov
N
O
ct
+1
5
5
Se
p
+1
5
Au
g
+1
5
l +1
Ju
15
Ju
n+
5
ay
+1
5
M
Ap
r+1
5
ar
+1
M
+1
5
Fe
b
15
Ja
n+
14
De
c+
4
+1
ov
N
ct
+1
4
4
O
+1
Se
p
+1
g
Au
Ju
l +1
4
4
0%
Woolworths price movement (3mma)
CPI (Food & Non-alcoholic Beverages) (3mma)
Woolworths sales growth (3mma)
Growth in Nielsen Defined Basket (3mma)
• T otal sales up 11.2%*, including concession sales,
with comparable sales increasing 9.7%*
– Growth well ahead of the market
– Online sales up 48% to 3.5% of sales
• Gross profit margin of 41.6%*
– Impacted by weaker A$ and lower
intake margin
• Contribution to profit across the Group up 19%
• Business turnaround well advanced
• New CEO from January 2016
* Including 100% of Woolworths brands in David Jones
WHL / 10
• Total turnover up 11.9%, well above market growth
– Strong, profitable growth in David Jones concession business
– Comparable sales in Australasia up 0.1%
– 16.0% increase in space
– Underperformance of core Country Road womenswear business
– Online sales up 28% to 11.6% of sales
• Gross profit margin down from 62.3% to 61.0%
– Higher markdowns from Country Road womenswear
– Impact of depreciating A$ on cost of goods
• Operating margin down from 12.6% to 11.8%
• Operating profit up 5.2%
WHL / 11
FINANCIAL
REVIEW
REEZA ISAACS
WHL / 12
STILL SOME COMPLEXITY IN THE NUMBERS
• David Jones in current period for 6 months vs 5 months in prior period
• David Jones acquisition debt in place for 5 months in prior period,
but higher interest charge due to the equity bridge in place for 2 months
• CRG minority interest for 2 months last year
• Significant adjusting items last year
• Rights offer completed end September 2014; 3 months weighted WANOS
impact on EPS and HEPS
• Woolworths brands in David Jones are accounted for on a 50/50 profit
share basis (“PSV”)
WHL / 13
FINANCIAL OVERVIEW
WHL / 14
Group turnover and concession sales
Up 17.1% to R35.5bn
– excluding David Jones
Up 12.3%
Adjusted profit before tax
Up 16.5% to R3.4bn
HEPS – Diluted
Up 30.8% to 251.7 cps
HEPS – Adjusted diluted
Up 3.9% to 250.8 cps
Interim dividend
– scrip dividend option offered
Up 37.8% to 133.0 cps
ROE
24.6%
GROUP INCOME
STATEMENT
WHL WOOLWORTHS
HOLDINGS LIMITED
FINANCIAL REVIEW REEZA ISAACS 14
GROUP INCOME STATEMENT
Dec 2015
Rm
Dec 2014
Rm
%
change
1 255
1 095
14.6
Woolworths Food
855
728
17.4
WFS (50% of PAT)
129
119
8.4
2 239
1 942
15.3
1 090
1 022
6.7
Country Road Group
Profit before interest and tax
632
3 961
555
3 519
13.9
12.6
Finance and other costs
Adjusted profit before tax
Adjustments
Profit before tax
Tax
Profit after tax
(606)
3 355
13
3 368
(939)
2 429
(639)
2 880
(549)
2 331
(684)
1 647
(5.2)
16.5
>100
44.5
37.3
47.5
27.9%
29.3%
Woolworths Clothing & GM
Woolworths
David Jones
Effective tax rate
WHL / 15
Dec 2015 Dec 2014
Unrealised FX gains
21
36
DJ and CRG transaction
and related costs
(8)
(585)
Adjustments
13 (549)
Prior year impacted by non-deductible
costs
GROUP INCOME STATEMENT
COMMENTARY
Adjustments
Unrealised FX gains
DJ and CRG transactions and related costs
Adjustments
Dec 2015
21
(8)
13
Dec 2014
36
(585)
(549)
Effective tax rate - Prior year impacted by non-deductible costs
WHL / 16
WHL
WOOLWORTHS HOLDINGS LIMITED
INCOME STATEMENT
FINANCIAL REVIEW REEZA ISAACS 15
WOOLWORTHS CLOTHING & GM INCOME STATEMENT
Dec 2015
Rm
Dec 2014
Rm
6 994
6 218
12.5
3 632
3 278
10.8
Gross profit
3 362
2 940
14.4
Other revenue
11
9
22.2
Expenses
2 119
1 855
14.2
Store costs
1 401
1 237
13.3
718
618
16.2
1 254
1 094
14.6
Gross profit margin - on turnover
48.1%
47.3%
Operating profit margin - on turnover
17.9%
17.6%
Turnover
Cost of sales
Other operating costs
Operating profit
WHL / 17
%
change
Total
Clothing
(incl CRG SA)
C&GM
(excl CRG SA,
incl 50% PSV)
Comp Price
stores move
11.7%
8.0%
6.6%
12.5%
7.9%
6.9%
Better promotions, improved
markdown performance, and inclusion
of PSV
Impacted by PSV, marketing and
BEEESOS costs
INCOME STATEMENT
COMMENTARY
Turnover
Clothing (including CRG SA)
C&GM (excl CRG SA, incl 50% PSV)
Total
11.7%
12.5%
Comp
stores
8.0%
7.9%
Price
move
6.6%
6.9%
Gross profit - Better promotions, improved markdown performance,
and inclusion of PSV
Expenses - Impacted by PSV, marketing and BEEESOS costs
WHL / 18
WHL
INCOME STATEMENT
FINANCIAL REVIEW REEZA ISAACS 16
WOOLWORTHS HOLDINGS LIMITED
WOOLWORTHS FOOD INCOME STATEMENT
Dec 2015
Rm
Dec 2014
Rm
%
change
12 376
11 041
12.1
(274)
(205)
33.7
12 102
10 836
11.7
9 031
8 102
11.5
3 071
2 734
12.3
56
42
33.3
Expenses
2 272
2 049
10.9
Store costs
1 588
1 417
12.1
Other operating costs
684
632
8.2
Operating profit
855
727
17.6
25.4%
25.2%
7.1%
6.7%
Turnover and concession sales
Concession sales
Turnover – own buy
Cost of sales
Gross profit – own buy
Concession and other revenue
Gross profit margin - on turnover
Operating profit margin - on turnover
WHL / 19
Total
12.1%
Comp
Price
stores move
5.8%
5.7%
More profitable promotions, offset
by lower sweet sales
Impacted by new space
INCOME STATEMENT
COMMENTARY
Turnover and concession sales
Total
12.1%
Comp
stores
5.8%
Price
move
5.7%
Gross profit - own buy - More profitable promotions,
offset by lower sweet sales
Store costs - Impacted by new space
WHL / 20
WHL
EXPENSES
FINANCIAL REVIEW REEZA ISAACS 17
WOOLWORTHS HOLDINGS LIMITED
WOOLWORTHS EXPENSES
WHL / 21
Dec 2015
Rm
Dec 2014
Rm
%
change
Store costs
Base
New stores
2 989
2 047
942
2 654
1 973
681
12.6
3.8
Other operating costs
1 402
1 250
12.2
Total expenses
4 391
3 904
12.5
Benefit of lower card commissions and
improved staff scheduling
Impact of PSV, marketing and BEEESOS
costs
EXPENSES
COMMENTARY
Base store costs - Benefit of lower card commissions and improved
staff scheduling
Other operating costs - Impact of PSV, marketing and BEEESOS costs
WHL / 22
WHL
INCOME STATEMENT
FINANCIAL REVIEW REEZA ISAACS 18
WOOLWORTHS HOLDINGS LIMITED
WFS INCOME STATEMENT
Consolidated pro-forma
income statement
Dec 2015
Rm
% to
book
Dec 2014
Rm
% to
book
%
change
Interest income
958
19.4
838
18.7
14.3
Interest paid
274
5.5
243
5.4
12.8
684
13.8
595
13.3
15.0
241
4.8
214
4.8
12.6
443
9.0
381
8.5
16.3
Non-interest revenue
374
7.6
332
7.4
12.7
Operating costs
461
9.3
383
8.6
20.4
356
7.2
330
7.4
7.9
Net interest income
Impairment charge
Risk-adjusted margin
Profit before tax
WHL / 23
Average financial
services assets
9 893
8 950
Return on equity
28.4%
29.4%
10.5
Portfolio book growth and
margin gains on interest rate
increases
Improvement in portfolio book
offset by increase in debt
counselling inflows
WRewards and NCAA
implementation costs
Closing book up 7.8% slowdown due to NCAA
implementation
INCOME STATEMENT
COMMENTARY
Net interest income - Portfolio book growth and margin gains on interest
rate increases
Impairment charge - Improvement in portfolio book offset by increase
in debt counselling inflows
Operating costs - WRewards and NCAA implementation costs
Average financial services assets - Closing book up 7.8% - slowdown
due to NCAA implementation
WHL / 24
WHL
WOOLWORTHS HOLDINGS LIMITED
BOOK PERFORMANCE
FINANCIAL REVIEW REEZA ISAACS 19
WFS BOOK PERFORMANCE
10 000
9 938
9 221
10%
8 359
8 000
8%
7 344
6 558
6 000
4 000
2 000
4.3%
3.0%
1 863
4.8%
4.8%
4%
2.7%
1 885
1 926
1 918
1 888
2%
0%
Dec 11
Gross book value (Rm)
WHL / 25
6%
Dec 12
Dec 13
Total active accounts (000's)
Dec 14
Dec 15
Impairment charge (%)
INCOME STATEMENT
WHL
FINANCIAL REVIEW REEZA ISAACS 20
WOOLWORTHS HOLDINGS LIMITED
DAVID JONES INCOME STATEMENT
6 months
Dec 2015
A$m
Turnover and concession sales
Concession sales
Turnover – own buy
Cost of sales
Gross profit – own buy
Concession and other revenue
Gross profit
Expenses
Store costs
Other operating costs
1 149
(391)
758
404
354
91
445
347
286
61
890
(273)
617
313
304
61
365
265
225
40
98
9
107
(3)
104
100
7
107
107
38.7%
8.5%
41.0%
11.2%
Department store operating profit
Financial services operating profit
Operating profit before restructure costs
Restructure costs
Operating profit
Gross profit margin
Operating profit margin**
* From acquisition date of 1 August 2014
** Department store operating profit as a percentage of turnover and concession sales
WHL / 26
5 months*
Dec 2014
A$m
Sales growth of 11.2%, with
comparable stores up 9.7%
Includes high clearance month of
July, and lower intake margin on
A$ weakness
Change in concession/own buy
mix and service model,
expansion of CRG
Cost of initiatives and private
label launch
INCOME STATEMENT
COMMENTARY
Turnover and concession sales - Sales growth of 11.2%, with comparable
stores up 9.7%
Gross profit – own buy - Includes high clearance month of July,
and lower intake margin on A$ weakness
Concession and other revenue - Change in concession/own buy mix
and service model, expansion of CRG
Expenses - Cost of initiatives and private label launch
WHL / 27
INCOME STATEMENT
WHL
FINANCIAL REVIEW REEZA ISAACS 21
WOOLWORTHS HOLDINGS LIMITED
DAVID JONES INCOME STATEMENT
6 months
Dec 2015
A$m
Turnover and concession sales
Concession sales
Turnover – own buy
Cost of sales
Gross profit – own buy
Concession and other revenue
Gross profit
Expenses
Store costs
Other operating costs
1 149
(391)
758
404
354
91
445
347
286
61
Department store operating profit
Financial services operating profit
Operating profit before restructure costs
Restructure costs
Operating profit
Gross profit margin
Operating profit margin**
480
361
98
9
107
(3)
104
119
38.7%
8.5%
41.6%
10.3%
* Accounting for CRG concessions as own buy and includes 100% PSV
** Department store operating profit as a percentage of turnover and concession sales
WHL / 28
Full vertical*
6 months
Dec 2015
A$m
1 155
Positive gross profit and
operating profit margin
leverage for the Group
from higher margins and
expense leverage
INCOME STATEMENT
COMMENTARY
Gross profit margin
Operating profit margin
- Positive gross profit and operating profit margin leverage for the Group
from higher margins and expense leverage
WHL / 29
WHL
WOOLWORTHS HOLDINGS LIMITED
INCOME STATEMENT
FINANCIAL REVIEW REEZA ISAACS 22
COUNTRY ROAD GROUP INCOME STATEMENT
Turnover
Cost of sales
Gross profit
Other revenue
Expenses
Store costs
Other operating costs
Operating profit
Gross profit margin - on turnover
Operating profit margin - on turnover
WHL / 30
Dec 2015
A$m
Dec 2014
A$m
%
change
516
201
315
2
256
184
72
461
174
287
1
230
164
66
11.9
15.5
9.8
100.0
11.3
12.2
9.1
61
58
5.2
61.0%
11.8%
62.3%
12.6%
Above market growth,
comparable sales up 0.1% in
Australasia
Increased markdowns in Country
Road womenswear
Impact of 16.0% new space
INCOME STATEMENT
COMMENTARY
Turnover - Above market growth, comparable sales up 0.1% in Australasia
Gross profit - Increased markdowns in Country Road womenswear
Store costs - Impact of 16.0% new space
WHL / 31
FINANCE AND OTHER COSTS
WHL
FINANCIAL REVIEW REEZA ISAACS 23
WOOLWORTHS HOLDINGS LIMITED
TREASURY
Dec 2014
Rm
Capital
Rate**
ZAR senior debt*
R10bn
8.91%
443
365
AUD senior debt*
$497m
4.42%
115
110
36
194
-
134
594
803
Short-term facilities
Equity bridge
Net finance costs
Less: non-recurring finance costs
Other costs
Total finance
and other costs
* Includes amortised costs
** Partially hedged all-in rate including amortisation of upfront costs
WHL / 32
Dec 2015
Rm
-
(164)
12
-
606
639
BALANCE SHEET
WHL
FINANCIAL REVIEW REEZA ISAACS 24
WOOLWORTHS HOLDINGS LIMITED
BALANCE SHEET
Assets
Property, plant and equipment and
investment properties
Intangible assets
Investment in JVs and associate
Inventories
Accounts receivable, tax, deferred
tax and loans
Cash
Equity and liabilities
Shareholders’ funds
Borrowings
Other non-current liabilities and
deferred tax
Accounts payable, provisions and
tax
WHL / 33
Dec 2015
Rm
Dec 2014
Rm
%
change
Constant
currency
% change
16 986
18 505
957
7 299
13 758
16 562
866
5 676
23.5
11.7
10.5
28.6
7.7
(3.2)
10.5
17.3
4 837
1 525
50 109
4 311
2 765
43 938
12.2
(44.8)
14.0
3.8
(49.1)
0.9
19 078
15 950
14 027
16 840
36.0
(5.3)
11.1
(11.0)
3 186
11 895
3 284
9 787
(3.0)
21.5
(13.0)
11.5
50 109
43 938
14.0
0.9
New stores and project costs
Impacted by space growth,
inflation, PSV and lower sell
through in CRG
Net gearing in constant
currency has improved
BALANCE SHEET
COMMENTARY
Property, plant and equipment and investment properties
- New stores and project costs
Inventories - Impacted by space growth, inflation, PSV and lower sell
through in CRG
Cash
Borrowings
- Net gearing in constant currency has improved
WHL / 34
CASH GENERATION FOR SIX MONTHS FROMFINANCIAL
JUNE
2015
REVIEW REEZA ISAACS 25
WHL
WOOLWORTHS HOLDINGS LIMITED
CASH GENERATION
For six months from June 2015
Rm
6 000
5 208
5 000
(102)
(592)
4 000
(962)
3 000
2 000
(1 432)
1 000
531
(1 442)
Cash flow
from
operating &
JV activities
WHL / 35
Working
capital &
other
movements
Finance
costs
Taxation
Net
capex
Dividends
(25)
(122)
Share
Net
scheme
borrowings
settlements
Net
increase in
cash
CAPITAL
EXPENDITURE
WHLWHL
WOOLWORTHSWOOLWORTHS
HOLDINGS LIMITED
HOLDINGS LIMITED
DEPRECIATION
FINANCIAL REVIEW
FINANCIAL
REEZAREVIEW
ISAACS 26
REEZA ISAACS 26
CAPITALCAPITAL
EXPENDITURE
EXPENDITURE DEPRECIATION
DEPRECIATION
Capex (Rm)Capex (Rm)
R1 305m (Dec 2014:
R1 305m
R1 325m)
(Dec 2014: R1 325m)
221
221
491
375
491
375
82
82
Dec 2015
Rm
Dec
Dec2014
2015
Rm
Rm
Dec 2014
%
change
Rm
%
change
Woolworths
Woolworths
410
366
410
12.0366
12.0
David Jones
David Jones
292
234
292
24.8234
24.8
Country Road Group
Country Road Group143
110
143
30.0 110
30.0
710
845
19.0
710
19.0
Total group Total Group
709
709
Dec 2015
752
Dec 2015 Dec 2014
Woolworths
Woolworths
David Jones
David Jones
Country Road Group
Country Road Group
WHL / 36
752
Dec 2014
845
EARNINGS AND DISTRIBUTION
WHL
FINANCIAL REVIEW REEZA ISAACS 27
WOOLWORTHS HOLDINGS LIMITED
EARNINGS AND DISTRIBUTION
cents
1.9
1.8
280
1.9
1.9
1.9
times
2.0
253.5
240
1.6
200
194.1
183.6
156.7
160
1.2
133.0
129.5
120
80
96.4
82.1
71.6
0.8
96.5
0.4
40
-
Dec 11
Dec 12
HEPS*
Dec 13
DPS**
* HEPS based on weighted average number of shares
** DPS based on closing number of shares
WHL / 37
Dec 14
Distribution cover
Dec 15
-
GUIDANCE
WHL / 38
GROUP
• Deterioration in global outlook; impact on SA and Australian economies
and consumer
• Our response – appropriate review of costs and capex
• Trading in the first 6 weeks of the second half has been in line with that
of the first half
Shareholders are advised that this information has not been reviewed and reported on by the group’s external auditors and it does not constitute a profit forecast.
WHL / 39
•
•
•
•
Clothing & GM price movement expected to be 8 – 9% for FY2016
Food price movement expected to be 6 – 7% for FY2016
Full year space growth: 5.0% in Clothing & GM; 9.8% in Food
Gross profit margins to be broadly maintained in Clothing; will be some price
investment in Food
• WFS book growth and costs to be impacted by NCAA, and higher interest
rates will affect interest income and impairments
Shareholders are advised that this information has not been reviewed and reported on by the group’s external auditors and it does not constitute a profit forecast.
WHL / 40
• Above market sales growth expected to continue – up
against a strong second half last year
• Transformation to gain traction – will impact expenses
and capex in H2
• Expecting improved sales performance
from Country Road womenswear
• Mimco to roll out in 11 Myer stores in Q3
• Continued focus on cost management
Shareholders are advised that this information has not been reviewed and reported
on by the group’s external auditors and it does not constitute a profit forecast.
WHL / 41
GROUP CONTINUED
• Taxation - effective tax rate of 28% in SA and 30% in Australia
• Capex for FY2016
– R2.0bn in South Africa
– A$100m in David Jones
– A$56m in Country Road Group
Shareholders are advised that this information has not been reviewed and reported on by the group’s external auditors and it does not constitute a profit forecast.
WHL / 42
STRATEGIC
FOCUS
IAN MOIR
WHL / 43
STRATEGY UPDATE
• Group Focus
– Stronger, more profitable customer relationships
– Towards total retail
– Drive synergies and efficiencies
– Embed sustainability throughout the business
• Woolworths
• David Jones
• Country Road Group
WHL / 44
GROUP FOCUS
1
Stronger, more profitable customer relationships
• Customer insights and data will drive and inform
all our business decisions which will shift us from
being a customer centric business to a customer
driven group
WHL / 45
GROUP FOCUS
2
Towards total retail
• I ncreased focus on the customer and integrated,
customer-focused technology to move from
a channel to total retail experience
• Building single view of customer, enabling
customers to be recognised and rewarded in real
time, with delivery of personalised, seamless service
across channels
• Digitally transform stores, improving connectivity
to enable staff and customers to engage differently
• Increased focus on mobile commerce
• Investigate potential for single E-commerce
platform across the group
WHL / 46
GROUP FOCUS
3
Drive synergies and efficiencies
• D rive scale benefits across the southern hemisphere
• Improved distribution capacity
• Leverage real estate in Australia
WHL / 47
GROUP FOCUS
4
Embed sustainability throughout the business
• D riving a consistent, group-wide Good Business
Journey strategy with the objective of being the
most sustainable retailer in the southern hemisphere
WHL / 48
• Be a leading fashion retailer in the southern hemisphere
– Attract younger, more modern, black customers while
maintaining our older, very loyal, more classic customer
– Lead the market in quality and range
– Strengthen value perceptions
– Continue to build fashion credibility
WHL / 49
• Become a big food business with a difference
– Continue to complete the shop
– Improve our value perception by investing in price
– Maintain our food authority credentials
• Continue to expand into Africa
• Transform the WFS customer experience
– E nhanced by alignment with WRewards programme
in October 2015
WHL / 50
• Build stronger, more profitable customer relationships
– Introduction of Customer Relationship Management (CRM) programme
• Be a leading fashion retailer in the southern hemisphere
– Focus on our brand and customer
– Improvement in merchandise
– Implement integrated planning system
– O ptimise store portfolio with new stores and formats e.g. Pacific Fair,
Wellington, Barangaroo
WHL / 51
• Enhance the food offer and in-store experience
– Stabilise the current business
– Build for scale
• Continue to enhance the online performance to > 10% sales
of total sales and transform profitability
• Consolidation of David Jones CBD flagship stores, focusing
on Sydney in 2016
• Rental benefits from regional bargaining power
WHL / 52
• Be a leading fashion retailer in the southern hemisphere
– Drive and grow four clearly differentiated brands
– Increased focus on design
– Refocus on core business, specifically Country Road womenswear
•Refine product to reflect customer feedback with strong
seasonal direction
• Define and standardise planning processes across divisions
WHL / 53
• Further refinement of the customer experience
• O ptimise channel mix by reviewing our store network and optimising
the online fulfilment model
• Drive efficiencies from the transition to the new Melbourne-based
omni-channel fulfilment centre
WHL / 54
OUT
LOOK
IAN MO I R
WHL / 55
OUTLOOK
WHL
OUTLOOK IAN MOIR 39
WOOLWORTHS HOLDINGS LIMITED
OUTLOOK
• South African economy likely to become more constrained
!  South African economy likely to become more constrained
• Australian economy and retail environment to remain tough in the
WHL
!  Australian economy and retail environment to remain tough in the short term
short term
!  Both economies are commodity-based and therefore reliant on China
OUTLOOK
•
Both
economies
are
commodity-based
and
therefore
reliant
on
China
! 
African
to become
more constrained
!  South
Expect
theeconomy
upperlikely
income
consumer
in both regions to remain relatively resilient
E
xpect
the
income
consumer
!  •Australian
economy
andupper
retail environment
to remain
tough in the shortin
termboth regions to remain
!  First 6 weeks of sales are strong in both South Africa and Australia
!  Both economies are commodity-based and therefore reliant on China
relatively resilient
!  Expect the upper income consumer in both regions to remain relatively resilient
First
6 ofweeks
of insales
are
in both South Africa and Australia
!  •First
6 weeks
sales are strong
both South
Africastrong
and Australia
OUTLOOK IAN MOIR 39
WOOLWORTHS HOLDINGS LIMITED
Medium-term target
FY2018
WHL / 56
Operating profit margin Medium-term target
FY2018
Woolworths
Operating
profit Clothing
margin & GM
Woolworths
Clothing
& GM
19%
Woolworths
Food
Woolworths Food
7%
David Jones*
David Jones*
>10%
Country
Country
RoadRoad
Group Group
14%
ROE
ROE
Woolworths
Financial
Services Services
22%
Woolworths
Financial
* Department store operating profit as a percentage of turnover and concession sales
* Department store operating profit as a percentage of turnover and concession sales
19%
7%
>10%
14%
22%
INFO
ADDITIO NAL
WHL / 57
TRADING SPACE
WHL
ADDITIONAL INFORMATION 43
WOOLWORTHS HOLDINGS LIMITED
TRADING SPACE
Dec 2015
000m2
Dec 2014
000m2
%
change
Projected
Jun 2016
000m2
Projected
Jun 2018
000m2
%
change
Woolworths
Clothing & GM
450
425
5.9
462
5.0
478
3.5
506
5.9
South Africa
408
383
6.5
420
5.8
433
3.1
459
6.0
Rest of Africa
42
42
-
42
(2.3)
45
7.1
47
4.4
Woolworths
Food
216
196
10.2
225
9.8
243
8.0
257
5.8
South Africa
209
189
10.6
217
9.6
234
7.8
248
6.0
Engen
2
2
-
3
50.0
4
33.3
4
-
Rest of Africa
5
5
-
5
-
5
-
5
-
460
455
1.1
469
3.1
472
0.6
479
1.5
Country Road
Group**
116
100
16.0
119
7.2
121
1.7
124
2.5
Australasia
101
87
16.1
103
5.1
104
1.0
106
1.9
South Africa
15
13
15.4
16
23.1
17
6.3
18
5.9
David Jones
* From June 2015
** Includes 21 921m2 Country Road Group brand concessions in David Jones stores
WHL / 58
%
change*
Projected
Jun 2017
000m2
%
change
STORE LOCATIONS
WHL
ADDITIONAL INFORMATION 44
WOOLWORTHS HOLDINGS LIMITED
STORE LOCATIONS
Dec 2015
Dec 2014
Growth
Projected
Jun 2016
Woolworths
Clothing & GM
282
267
15
285
6
291
South Africa
217
205
12
219
5
Rest of Africa
65
62
3
66
409
387
22
South Africa**
317
302
Engen
67
60
Rest of Africa
25
25
39
38
Country Road
Group***
636
Australasia
South Africa
Woolworths
Food
David Jones
*
Projected
Jun 2018
Growth
6
302
11
221
2
229
8
1
70
4
73
3
415
18
441
26
454
13
15
319
8
330
11
341
11
7
71
9
85
14
85
-
25
1
26
1
28
2
1
40
2
42
2
44
2
566
70
658
49
672
14
682
10
559
492
67
576
45
582
6
588
6
77
74
3
82
4
90
8
94
4
-
Growth*
Projected
Jun 2017
From June 2015
** Of which 163 are standalone Food stores
*** Includes 157 CRG brand concessions in David Jones stores. CRG brand concessions may extend over multiple pads.
WHL / 59
Growth
WHL
WOOLWORTHS HOLDINGS LIMITED
CONTRIBUTION ADDITIONAL
TO SALES
INFORMATION 45
WFS CONTRIBUTION TO SALES
% of sales spent on Woolworths cards
Dec 2015
Dec 2014
Clothing & GM
23.5%
24.7%
Food
10.6%
11.5%
15.4%
16.5%
1.4%
1.3%
16.8%
17.8%
Aggregate Woolworths card contribution
Credit card
Aggregate Woolworths and credit card
contribution
WHL / 60
INCOME STATEMENT (IN RANDS)
WHL
ADDITIONAL INFORMATION 46
WOOLWORTHS HOLDINGS LIMITED
DAVID JONES INCOME STATEMENT (IN RANDS)
6 months
Dec 2015
Rm
Turnover and concession sales
Concession sales
Turnover – own buy
Cost of sales
Gross profit – own buy
Concession and other revenue
Gross profit
Expenses
Store costs
Other operating costs
Department store operating profit
Financial services operating profit
Operating profit before restructure
costs
WHL / 61
11 427
(3 877)
7 550
4 006
3 544
895
4 439
3 432
2 806
626
5 months
Dec 2014
Rm
8 619
(2 655)
5 964
3 027
2 937
595
3 532
2 577
2 184
393
1 007
83
955
67
1 090
1 022
BALANCE SHEET
WHL
ADDITIONAL INFORMATION 47
WOOLWORTHS HOLDINGS LIMITED
DAVID JONES BALANCE SHEET
Dec 2015
A$m
Dec 2014
A$m
%
change
Property, plant and equipment
1 028
994
3.4
Goodwill and brands
1 344
1 407
(4.5)
21
28
(25.0)
Inventories
229
185
23.8
Accounts receivable, tax and deferred tax
152
174
(12.6)
47
94
(50.0)
2 821
2 882
(2.1)
Assets
Intangible assets
Cash
Total assets
Non-current and current
non-interest bearing liabilities
Capital employed
Period-end exchange rate (R/A$)
WHL / 62
(618)
(591)
2 203
2 291
11.1
9.4
4.6
(3.8)
WHL
WOOLWORTHS HOLDINGS LIMITED
INCOME STATEMENTADDITIONAL
(IN RANDS)
INFORMATION 48
COUNTRY ROAD GROUP INCOME STATEMENT (IN RANDS)
Dec 2015
Rm
Dec 2014
Rm
%
change
5 117
4 487
14.0
1 991
1 698
17.3
Gross profit
3 126
2 789
12.1
Other revenue
17
14
21.4
Expenses
2 511
2 248
11.7
Store costs
1 803
1 601
12.6
708
647
9.4
632
555
13.9
Turnover
Cost of sales
Other operating costs
Operating profit
WHL / 63
WHL
WOOLWORTHS HOLDINGS LIMITED
BALANCE SHEET
ADDITIONAL INFORMATION 49
COUNTRY ROAD GROUP BALANCE SHEET
Dec 2015
A$m
Dec 2014
A$m
%
change
Property, plant and equipment
174
130
33.8
Intangible assets
136
136
-
Inventories
133
113
17.7
Accounts receivable, tax and deferred tax
68
55
23.6
Cash
19
39
(51.3)
Total assets
530
473
Non-current and current
interest-bearing liabilities
(152)
(138)
Capital employed
378
335
11.1
9.4
Assets
Period-end exchange rate (R/A$)
WHL / 64
12.1
10.1
12.8