Struggling – for now
The Woolies* results were very disappointing, as indicated by its trading update from January. HEPS was down 4.3% while the dividend was kept at 133c. Country Road continues to struggle and locally the retailer is also being hurt by the new entrants into our market. Fortunately, unlike other clothing retailers, it has a strong food division. Woolworths also has Australia, with that division making up almost 40% of sales. Several people have asked me whether the great days are over for the retailer – and if we should sell. My answer is no. I have held the stock for over a decade and was buying late last year as the price fell. More importantly, while business is currently very tough for Woolworths, this will pass and boom times will return. This retailer has great brands and management – part of being a long-term investor is staying the course even when things are tough. However, there is one proviso: you must believe the tough times will pass, and I do.