Company announcements

Woolworths Holdings Ltd

Analysis of upcoming company announcements, using our market insight information and analysis tools.

For this edition, we cover the following stocks:

Kumba Iron Ore Ltd

Barclays Group Africa Ltd

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Economic catalysts

Woolworths Holdings Ltd

Interim results ending 29 December 2013 expected 13 February 2014 

Woolworths Holdings Ltd. is retail group listed on the JSE Ltd. ("the JSE"). In South Africa, the business comprises of retail stores offering customers a selected range of quality clothing, food, homeware, beauty and financial services under its own brand name. Woolworths Holdings also owns Country Road Ltd., a leading clothing and homeware retailer listed on the Australian Stock Exchange.

Results expectation

Woolworths Holdings Ltd is expected to release interim results for the 26 weeks ending 29 December 2013 on 13 February 2014.

Forward guidance released via the Stock Exchange News Service (SENS), highlights clothing sales in South Africa increasing 10.7%, food sales increasing 15.3% and sales in Australia and New Zealand increasing 28.9% (in Australian dollar terms).

The Woolworths Financial Services debtors book raised investor concerns as annualized impairments including collection costs for the period jumped to 4.3% from 2.7% in the 2012 comparative, a near 60% increase.The growth in impairments catalyzed a significant drop in the share price of Woolworths which has extended further losses since reserve bank governor Gill Marcus raised interest rates.

Although historically a market darling, Woolworths currently finds itself under pressure along with the retail sector for reasons both inherent and sector based. Retailers battle higher input costs as interest rates become less favourable, while local consumers have high levels of debt with increased financing costs equating to less spending ability. This could impact sales volumes and debt obligations within the sector with retailers biased towards credit sales having elevated risk

A pressured consumer with high levels of debt, reduced spending ability and higher financing costs, combined with less favorable exchange rates increasing input costs draws concerns around retailers especially those biased to credit sales.

Source: IG Insight, as of 17:39 06/02/2014

Source: IG Insight, as of 17:41 06/02/2014

Technical View

The price of Woolworths is testing critical support at 5880 which has held relevance for the last 18 months, while the price has been in a large range bound environment.

Should the level be broken, support is favoured at 5050 and would have implications on the long-term trend which would be considered down from what is currently considered as sideways.

Source: ProRealTime Charts, as of 06/02/2014

Fundamentals

Source: IG Insight, as of 17:48 06/02/2014

Source: IG Insight, as of 17:53 06/02/2014

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