Financials & valuation: Woolworths

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Financials & valuation: Woolworths

EPS ROE (%) 25.5 25.2 26.9 28.1

growth of 1-6% for FY’26, prompting cuts of 4-7% to our FY’26-28 estimates. 52-WEEK PRICE (ZAR)

FBH is the key driver of our estimate cuts. Trading momentum deteriorated sharply in 63.00

H2 (+2.6%) and particularly in Q4 as discretionary demand weakened and promotions 52.50

intensified. Woolies price investment in Kidswear, together with elevated promotional

42.00

activity and the clearance of excess inventory following weaker sales, materially diluted 07/25 01/26 07/26

GP margin in H2. Cost-reduction efforts were insufficient to offset the margin impact. Target price: 59.00 High: 60.54 Low: 44.77 Current: 48.02

Source: LSEG IBES, HSBC estimates

CRG has been reset to a more efficient operating model and returned to full-year

profitability in FY’26, supported by a higher full-price mix, reduced discounting and a

Nick Webster*

lower cost base. However, the macro and sector backdrop in Australia/NZ remains Senior EM Consumer Analyst

challenging. Rate hikes in H2 and an intensely promotional market weighed on demand, HSBC Bank plc nick.webster@hsbc.com

with H2 sales down 0.5%. GP margin recovery towards 60% and lower costs will be key +44 7468 703441

drivers given the inflation/interest rate cycle in Australia could mute topline growth. While Harshul Sharma*

Analyst, South Africa Consumer and Industrials

we forecast a continued rise in margins, the shape of recovery is less certain. HSBC Securities and Capital Markets (India) Private Limited

harshul.sharma@hsbc.co.in

Lower earnings by 4-7% and TP to ZAR59 (from ZAR61), maintain Buy. We cut our +91 91 3676 7047

FY26-28 normalised DHEPS estimates by 4-7%, as we incorporate the weaker-than- Ayanda Malinga*

expected update.