Weaker than ex­pected

Finweek English Edition - - MARKET PLACE -

Re­tail trad­ing up­dates are start­ing to ar­rive and they show tough con­di­tions, with Wool­worths* see­ing neg­a­tive growth when look­ing at like-for-like sales less prod­uct in­fla­tion. The ques­tion is whether it is los­ing mar­ket share to com­peti­tors or if the mar­ket is shrink­ing. I sus­pect the for­mer but we’ll need to see more trad­ing up­dates from other re­tail­ers (es­pe­cially the mid­dle and lower-in­come re­tail­ers) to get a clearer pic­ture. Woolies also of­fers an im­por­tant illustration of why head­line earn­ings per share (HEPS) is a much bet­ter in­di­ca­tion of prof­its rather than straight earn­ings per share (EPS). EPS is ex­pected to be 30% to 40% higher, but this in­cludes the prof­its from the sale of the Mar­ket Street prop­erty in Syd­ney. As al­ways, HEPS ex­cludes these sorts of one-off events and is ex­pected to be 2.5% to 7.5% weaker. Over­all, this up­date is weaker than I ex­pected and my ex­pected 6% HEPS in­crease for the full year is now un­likely. That all said, I still hold the stock and am very com­fort­able ad­ding more be­low 7 000c.

A high-heeled shoe on dis­play in­side an Of­fice fash­ion footwear store, which is op­er­ated by Of­fice Re­tail Group. Tru­worths holds a ma­jor­ity share in Of­fice Re­tail Group.

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