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By Dineo Faku 
11h ago
JOHANNESBURG – Woolworths is in the process of fixing and repositioning its Fashion, Beauty and Home (FBH) business.
The group said it would refocus the business on the basics and open up to better understand the needs of its customers.
Chief Executive Officer Roy Bagattini said this week that the process would involve a strategy to identify lower fruits in the near term, as annual sales declined 10.7 percent due to Covid-19 outages.
He said the business posted a 24.1 percent decline in sales during the second half of the year ending in June, severely affected by the closure of stores in South Africa.
The unit’s operating profit fell 59.5 percent to 683 million rand, resulting in an operating margin of 5.5 percent.
Online sales, however, grew 41.3 percent in the second half and 35.4 percent for the year.
“I have pointed out that I think we had our strategy wrong and there were question marks about the execution of our strategy,” Bagattini said, adding that the focus would be on better understanding the group’s clients.
“We need to truly understand our customers, what they buy, why they buy, how they buy and what solutions they are looking for and let that inform our strategy.
“We have several brands, but they are not distinctive enough and create confusion in the mind of the customer. We are what I call too assorted, we have too many products but they don’t resonate with customers. “
Bagattini said Woolies would identify ways to take advantage of growth opportunities for the home business.
“We have not focused much on the home business. I think we are in this or we are out of it, and we have decided that we are in it and we are going to be much more serious in our home business and see how we can grow that. “
The group’s turnover was 1.2 percent less in the year ending in June compared to the previous year at R72.2 billion. Mergence Investment Managers analyst Lulama Qongqo said FBH’s business made up 17 percent of this financial year’s print revenue. She said Woolies was out of touch with its customer base.
Qongqo said that the target market, which is in the high-LSM group, means that it has significant online and international competitors fighting for the same target market.
“Their biggest problem is that prices have risen over the years, but the quality has gone in the opposite direction and they have deviated from the basic, elegant offering that Woolies customers used to love. They said they would fix the latter many times before, but I’m afraid they will likely remain irrelevant if the quality of their fashion merchandise continues to be poor relative to what customers expect from Woollies, ”Qongqo said.
Bagattini, who was president of jeans maker Levi Strauss Americas, before taking the reins from Ian Moir in February, said Woolies was not only dealing with the economic fallout due to Covid-19, but also with high unemployment in South Africa and the Australian perspective. economy going into recession were challenges for the future.
He said the group’s intention was stronger because of the pandemic.
“The board of directors and management team remain firmly focused on optimizing the group’s financial position, liquidity and capital structure, and repositioning the group for long-term, sustainable growth,” Bagattini said.
BUSINESS REPORT
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