the upmarket retailer Woolworths, which sells clothing, groceries and homeware, has been hit hard by tough trading conditions at home and in Australia this year, with headline earnings per share for the 52 weeks to 25 June expected to decline by between 5% and 10%.
The group said in a trading statement that its clothing and general merchandise businesses in SA, as well as David Jones in Australia, were particularly sluggish, with sales growth of 1.4% and 1% respectively. Food sales growth in SA remained above market during the period, with sales increasing by 8.6%. Woolworths is expected to release its results on 24 August. On the charts:
Woolworths’ share price has plummeted from a high of 10 800c/share in November 2015 and is now trading close to threeyear lows at 5 855c/share.
As part of its growth strategy, Woolworths is targeting a bigger slice of the beauty market and aims to continue improving its food offering to maintain its position as market leader in high-end food retail.
How to trade it:
Woolworths is teetering on its long-term support trendline dated back to 2012. Support kept at 5 855c/share would be a positive sign, as Woolworths could escape current bearishness above 6 725c/share. A more substantial buying opportunity would be triggered above 7 660c/share, with potential gains to 8 700c/ share and then 9 650c/share.
Alarm bells should sound below 5 855c/share, as a negative breakout out of the major bull trend would be confirmed on downside through 5 485c/ share. Selling to 4 730c/share, and possibly to 4 300c/share, could then ensue. ■