Our opinion on the current state of WOOLIES(WHL)
The sad fall of the Woolworths (WHL) share price was largely due to the decision of previous CEO, Ian Moir, and his board to buy David Jones in Australia for AU2.1bn. This acquisition has now had R12bn written off its original purchase price of R20bn in 2014. The only aspect sustaining the Woolworths group was its food sales. On 14th January 2020, Woolworths announced that they had appointed Roy Bagattini, from Levi Strauss, to replace Ian Moir as Group CEO with effect from 17th February 2020. Woolies' fashion and clothing section was also not performing well in a very difficult trading environment.
In its results for the six months to 24th December 2023, the company reported group turnover down 16.7% and headline earnings per share (HEPS) down 31%. The company said, "The Group's results for the first half of the 2024 financial year ('current period' or 'period') are not directly comparable to that of the prior period, given the inclusion of the David Jones contribution in the prior period." In a trading statement for the 53 weeks to 30th June 2024, the company estimated that HEPS would fall by at least 20% - partly due to its disposal of David Jones in Australia.
We recommend that you only consider Woolies shares when they break up through their current downward trendline, which does not look like happening anytime soon. The current P:E is around 13.18, and the shares are still falling.
Given the challenging retail environment, the significant write-downs on the David Jones acquisition, and the ongoing issues with its fashion and clothing segment, Woolworths faces significant headwinds. Investors should be cautious and look for signs of a sustainable turnaround, such as improved financial performance and breaking the downward trendline, before considering investing in Woolworths shares.
In its results for the six months to 24th December 2023, the company reported group turnover down 16.7% and headline earnings per share (HEPS) down 31%. The company said, "The Group's results for the first half of the 2024 financial year ('current period' or 'period') are not directly comparable to that of the prior period, given the inclusion of the David Jones contribution in the prior period." In a trading statement for the 53 weeks to 30th June 2024, the company estimated that HEPS would fall by at least 20% - partly due to its disposal of David Jones in Australia.
We recommend that you only consider Woolies shares when they break up through their current downward trendline, which does not look like happening anytime soon. The current P:E is around 13.18, and the shares are still falling.
Given the challenging retail environment, the significant write-downs on the David Jones acquisition, and the ongoing issues with its fashion and clothing segment, Woolworths faces significant headwinds. Investors should be cautious and look for signs of a sustainable turnaround, such as improved financial performance and breaking the downward trendline, before considering investing in Woolworths shares.
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