Weak, but no train smash
The much-anticipated Woolworths* trading update arrived and it is bleak. At the top level HEPS is expected to be down 5% to 10% while I was expecting it to be flat or only slightly down. So it is a little worse than expected. Food sales are weaker as some consumers are shopping down, and clothing continues to struggle, as has the whole sector locally with new entrants taking market share. This division performed slightly better than I had expected as I thought more shoppers would be shopping down to cheaper brands. Seemingly this has not been happening to such a great extent yet. Australian activities were mixed, with Country Road finally coming together with a better second half. So, a weak performance overall, but it is no train smash. Woolies will struggle in tough economic conditions and as a shareholder I expect this and continue to hold.