Woolworths faces fight on many fronts
Competition on the rise and Australian mission proves costly
Shares in Woolworths, once regarded as a recession-proof retailer, are trading close to three-year lows as the company finds itself stuck between SA’s stalling economy, the cash-guzzling turnaround of its David Jones acquisition in Australia and an impending competitive onslaught from Shoprite, which is moving up-market. Woolworths stock closed at R62.25 on Wednesday, a drop of 42% from its high of R106.88 on November 15 2015. In the same period, Shoprite shares have gained 36%. One analyst said the country’s retailers underestimated the gravity of the changes new entrants such as H&M and Zara were bringing to the apparel sector. If they failed tot adjust to this "seismic shift", they would battle to survive. "I get the sense that they think it’s just a cyclical downturn, and they are going to come up short," said Sasfin Securities’ retail analyst Alec Abraham. Abraham was also critical of apparel companies’ reliance on discounting. "That’s a race to the bottom. What is being overlo...
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