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Woolworths Holdings Limited (WLWHY)
OTHER OTC:WLWHY
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Woolworths Holdings
(OTC:WLWHY)
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Rating:52Neutral
Price Target:
$3.00
▼(-13.79% Downside)
Action:ReiteratedDate:03/04/26
The score is held back primarily by weak cash-flow fundamentals and leverage risk, reinforced by bearish technicals (below major moving averages and negative MACD). These are partly offset by a more positive earnings-call outlook centered on improving cash generation and a lower-CapEx phase, while valuation appears reasonable but not compelling given the risks.
Positive Factors
Strong cash generation
Sustained high cash conversion (110%) and multi‑bn ZAR free cash flow materially improve financial flexibility. This durable cash generation supports dividend payouts, buybacks, ongoing investment and lowers refinancing risk by reducing dependence on new debt.
High‑quality Food division
Food's best‑in‑class ~41% ROCE and steady sales growth create a durable, cash‑rich core. High unit economics and resilience to downturns provide stable earnings and cash flow that can fund group initiatives and offset volatility in apparel segments.
FBH operational recovery
Improved availability, inventory reduction and higher trading density reflect structural fixes to assortment, supply chain and store execution. These operational gains reduce markdown risk and support sustainable margin recovery and omnichannel monetisation over coming quarters.
Negative Factors
Elevated leverage
A debt‑to‑equity of 1.85 signals material reliance on debt funding, which constrains capital flexibility. Persistent leverage raises refinancing and interest‑cost vulnerability and limits the company's ability to pursue opportunistic investments or absorb macro shocks without restructuring financing.
Weak historical free cash flow
Very weak FCF growth and poor cash conversion historically indicate earnings are not reliably converting to cash. This structural cash‑flow weakness can impede sustained capex funding, dividends or debt reduction absent continued improvement in working capital and profitability.
Gross margin pressure and rising depreciation
Multiyear CapEx (new DC) raises depreciation and, combined with online mix dilution and deliberate price investments, creates sustained pressure on gross margins and EBIT. Elevated fixed charges can limit operating leverage until sales mix and gross margins normalise.
Woolworths Holdings (WLWHY) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$2.80B
Dividend Yield2.48%
Average Volume (3M)0.00
Price to Earnings (P/E)8.8
Beta (1Y)0.79
Revenue Growth7.08%
EPS Growth-1.75%
CountryUS
Employees37,499
SectorConsumer Cyclical
Sector Strength84
IndustryDepartment Stores
Share Statistics
EPS (TTM)0.10
Shares Outstanding981,774,000
10 Day Avg. Volume0
30 Day Avg. Volume0
Financial Highlights & Ratios
PEG Ratio-3.61
Price to Book (P/B)4.59
Price to Sales (P/S)0.61
P/FCF Ratio-167.72
Enterprise Value/Market Cap21.97
Enterprise Value/Revenue0.77
Enterprise Value/Gross Profit2.28
Enterprise Value/Ebitda9.46
Forecast
1Y Price TargetN/A
Price Target UpsideN/A
Rating ConsensusN/A
Number of Analyst Covering0
EPS Forecast (FY)N/A
Revenue Forecast (FY)N/A
Woolworths Holdings Business Overview & Revenue Model
Company DescriptionWoolworths Holdings Limited, through its subsidiaries, operates a chain of retail stores in sub-Saharan Africa, Australia, and New Zealand. It operates through seven segments: Woolworths Fashion, Beauty and Home; Woolworths Food; Woolworths Logistics; David Jones; Country Road Group; Woolworths Financial Services; and Treasury. The company provides food, clothing, homeware, beauty, and various lifestyle products, as well as operates department stores. It offers financial products and services, such as store cards, credit cards, personal loans, and insurance products. The company is also involved in the cash and debt management activities. It operates approximately 719 WSA stores in South Africa and 88 stores in the rest of Africa. The company was founded in 1931 and is based in Cape Town, South Africa.
How the Company Makes MoneyWoolworths generates revenue primarily through its retail operations, which include supermarkets, department stores, and online sales. Major revenue streams include the sale of food and grocery items, clothing, and home goods. The food division, which encompasses supermarkets, is the largest contributor to the company's earnings, benefiting from a strong brand reputation for quality and freshness. The clothing and general merchandise segments also contribute significantly, particularly through seasonal promotions and loyalty programs. Additionally, Woolworths has established partnerships with various suppliers and brands, enhancing its product offerings and market reach. The company's investment in online retail has also become an essential revenue driver, especially in response to evolving consumer shopping behaviors.
Woolworths Holdings Earnings Call Summary
Earnings Call Date:Mar 04, 2026
(Q2-2026)
| % Change Since: |
Next Earnings Date:Sep 02, 2026
Earnings Call Sentiment Positive
The call presents a constructive recovery narrative: sales growth, market-share gains across all divisions, strong cash generation, improved operational metrics (availability, inventory reduction, CRG turnaround) and continued investment in digital and customer-facing initiatives. However, margin pressure from recent capital investment (Midrand DC), deliberate price investments and inventory clearances, plus material foreign exchange headwinds and elevated depreciation, have constrained near-term EBIT and EPS growth in rand terms. On balance the company has moved decisively beyond its trough, showing multiple positive proof points and a clear pathway for improved full-year performance despite identifiable short-term challenges.Q2-2026 Updates
Positive Updates
Group Sales and Top-Line Momentum
Group turnover of ZAR 42.5 billion, up ~6% in constant currency; Woolworths South Africa sales +6.8%. Each business grew sales ahead of its competitor set and gained market share.
Earnings and EPS Growth
Adjusted EBITDA of ZAR 4.6 billion (+4.2% in constant currency) and adjusted EBIT of ZAR 2.9 billion (+4.1% cc). adHEPS of ZAR 1.70 per share, up ~3.8% in constant currency and +0.7% in rands.
Strong Cash Generation and Balance Sheet
Generated ZAR 4.8 billion cash from trading and free cash flow of >ZAR 2 billion. Achieved cash conversion ratio of 110%. Group net borrowings ZAR 5.8 billion and net debt-to-EBITDA ~1.48x, within covenants.
Shareholder Returns
Interim dividend of ZAR 1.18 per share (70% payout ratio) and share buybacks of ZAR 356 million in the half; cumulative buybacks of ~ZAR 4.2 billion over four years.
World-Class Food Performance
Food sales +7% with like-for-like +5.2%; Food EBIT ZAR 1.8 billion (+3.5%) and EBITDA growth in line with sales (~7%). Food return on capital remains best-in-class at ~41%.
Fashion, Beauty & Home (FBH) Operational Recovery
FBH sales +6.2% (like-for-like +6.4%) with trading densities up (~8–10%). On-shelf availability now >90% (c.20 percentage points improvement vs two years ago). FBH delivered the strongest total and like-for-like sales growth in the sector during the half.
Country Road Group (CRG) Turnaround Progress
CRG returned to profitability with EBIT AUD 14.8 million (+4.2% YoY in AUD). Inventory in CRG reduced ~15% and operating model changes removed stranded costs, supporting margin recovery.
Growth Initiatives and Innovation
Woolworths Ventures (WEdit, Food Services, WCellar, Absolute Pets) delivering double-digit growth; Absolute Pets opened its 200th store. Digital and AI investments include Labtrace food-safety AI and stronger omnichannel performance (Dash sales +23%, omnishopper value ~5x store-only).
Negative Updates
Gross Margin Pressure Across the Group
GP margin headwinds in multiple businesses driven by depreciation from the new Midrand DC (ZAR ~1.7bn investment now being depreciated), higher online mix diluting Food GP, deliberate price investments (e.g., FBH kids/baby) and clearance activity; overall aEBIT growth was modest (~4% cc) despite ~6% sales growth.
Significant Food Category Inflation and Volume Impact
Meat inflation ~30% YoY in core meat categories (material contributor to Food inflation of 4.6% in H1); estimated c.70 tonnes less meat sold per week due to higher prices and foot-and-mouth disease, weighing on volumes and margins.
Foreign Exchange and Currency Translation Drag
Stronger rand and weaker African currencies depressed group earnings: CRG EBIT +4.2% in AUD but -0.6% in rand, and ForEx movements materially affected FBH profitability (notably in Botswana and Mozambique).
Elevated Depreciation from CapEx Reducing EBIT Growth
High multiyear CapEx (c. ZAR 1.4bn H1; forecast ZAR 1.2bn H2) has increased depreciation, producing stronger EBITDA growth vs lower EBIT growth in Food and FBH.
Inventory and Promotional Clearance Impacted Margins
Deliberate accelerated clearance of excess apparel inventory and promotional intensity diluted gross margins in FBH and contributed to temporary storage/distribution costs from prior DC issues.
Modest Bottom-Line EPS in Rand Terms
While adHEPS improved in constant currency, adHEPS rose only ~0.7% in rands, reflecting currency and non-operational impacts limiting bottom-line improvement.
WFS Interest Income and Rising Impairments
Woolworths Financial Services net interest income declined ~0.7% (rate cuts) and impairment rate increased ~1 percentage point to 6.4%—still sector-leading but a deterioration vs prior year.
Near-Term Trading Headwinds and Macro Risks
Sales dipped slightly in the final weeks of H1; consumer spend remains constrained (especially middle-income); risks include foot-and-mouth disease, Middle East geopolitical uncertainty (potential shipping/fuel impacts) and persistent promotional intensity in Australia.
Company Guidance
Guidance from the call was that the group is moving into a cleaner, lower‑CapEx phase with continued improvement in cash generation and margins: H1 group turnover was ZAR 42.5bn (+~6% cc) with adjusted EBITDA ZAR 4.6bn (+4.2% cc) and adjusted EBIT ZAR 2.9bn (+4.1% cc), adHEPS ZAR 1.70 (+3.8% cc; +0.7% in rands) and an interim dividend of ZAR 1.18/share (70% payout); net borrowings were ZAR 5.8bn (net debt/EBITDA 1.48x incl. leases), cash conversion 110% and free cash flow >ZAR 2bn (FCF/share ZAR 2.31, >3x prior year), with ZAR 300m working capital released and group inventory down 1.4% (FBH inventories 7% down vs Jun, CRG inventory 15% lower YoY); H2 guidance: CapEx H2 ≈ ZAR 1.2bn (H1 ZAR 1.4bn), Food price movement ~3–4% (excl. meat), FBH price movement ~3–3.5%, expectation of normalising apparel inventory and improving GP margins in H2 (CRG EBIT was AUD 14.8m in H1, +4.2% AUD but –0.6% ZAR; AUD 220m proceeds from Bourke St sale realized with ~AUD100m remaining to repatriate), and management expects continued aEBIT/aEBITDA growth, sustained ROCE (group 16.6%; WSA 25.7%; Food 41%; FBH 13.5%) and that CRG should be at least break‑even at EBIT level in H2.Woolworths Holdings Financial Statement Overview
Summary
Income statement is moderate (Score 65) with modest revenue growth and low net margin, but profitability margins are trending down. Balance sheet is pressured (Score 55) due to high leverage (debt-to-equity 1.85) despite solid ROE. Cash flow is weak (Score 40) with sharply negative free cash flow growth and poor cash conversion versus net income, elevating financial risk.Income Statement
Woolworths Holdings has shown moderate revenue growth of 3.93% in the latest year, with a gross profit margin of 34.30% and a net profit margin of 3.07%. However, there is a declining trend in profitability margins such as EBIT and EBITDA margins, indicating potential challenges in maintaining operational efficiency.65
Positive
Balance Sheet
The company has a high debt-to-equity ratio of 1.85, which indicates significant leverage and potential financial risk. The return on equity is relatively strong at 22.96%, suggesting effective use of equity to generate profits. However, the equity ratio is low, reflecting a higher reliance on debt financing.55
Neutral
Cash Flow
Woolworths Holdings experienced a significant decline in free cash flow growth, with a negative rate of -110.32%. The operating cash flow to net income ratio is low at 0.23, indicating potential challenges in converting income into cash. The negative free cash flow to net income ratio further highlights cash flow management issues.40
Negative
| Breakdown | TTM | Jun 2025 | Jun 2024 | Jun 2023 | Jun 2022 | Jun 2021 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 79.63B | 79.54B | 76.53B | 72.27B | 80.07B | 78.76B |
| Gross Profit | 27.09B | 27.28B | 27.47B | 26.83B | 29.19B | 28.95B |
| EBITDA | 6.51B | 8.26B | 8.61B | 10.49B | 10.34B | 12.27B |
| Net Income | 1.65B | 2.44B | 2.59B | 5.07B | 3.71B | 4.16B |
Balance Sheet | ||||||
| Total Assets | 41.99B | 40.85B | 38.70B | 39.23B | 56.08B | 55.85B |
| Cash, Cash Equivalents and Short-Term Investments | 4.56B | 4.33B | 2.31B | 3.58B | 5.37B | 5.62B |
| Total Debt | 20.37B | 19.67B | 18.12B | 17.05B | 31.88B | 33.83B |
| Total Liabilities | 31.64B | 30.14B | 27.78B | 27.21B | 44.28B | 46.26B |
| Stockholders Equity | 10.29B | 10.64B | 10.86B | 11.99B | 11.78B | 9.57B |
Cash Flow | ||||||
| Free Cash Flow | 3.44B | -291.00M | 2.82B | 2.66B | 4.84B | 6.60B |
| Operating Cash Flow | 6.31B | 2.84B | 6.17B | 5.14B | 6.70B | 8.03B |
| Investing Cash Flow | -2.86B | -570.00M | -3.93B | -2.46B | -1.85B | 5.91B |
| Financing Cash Flow | -3.89B | 336.00M | -4.40B | -5.16B | -5.10B | -13.52B |
Woolworths Holdings Technical Analysis
Negative
3.48
Price Trends
3.41
Negative
3.32
Negative
3.12
Positive
Market Momentum
-0.09
Positive
41.12
Neutral
23.81
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For WLWHY, the sentiment is Negative. The current price of 3.48 is above the 20-day moving average (MA) of 3.25, above the 50-day MA of 3.41, and above the 200-day MA of 3.12, indicating a neutral trend. The MACD of -0.09 indicates Positive momentum. The RSI at 41.12 is Neutral, neither overbought nor oversold. The STOCH value of 23.81 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for WLWHY.
Woolworths Holdings Peers Comparison
UnderperformOutperform
Sector (61)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
68 Neutral | $2.89B | 17.00 | 10.53% | 2.18% | 2.76% | -7.83% | |
67 Neutral | $4.50B | 118.58 | 10.75% | 3.23% | -2.83% | 184.32% | |
65 Neutral | $9.07B | 16.61 | 30.03% | 3.99% | -1.07% | -5.22% | |
61 Neutral | $18.38B | 12.79 | -2.54% | 3.03% | 1.52% | -15.83% | |
61 Neutral | $1.35B | 15.53 | 26.62% | 2.28% | 3.61% | ― | |
52 Neutral | $2.80B | 8.84 | 16.46% | 2.48% | 7.08% | -1.75% | |
50 Neutral | $1.42B | 7.19 | 6.91% | 2.33% | -6.13% | -22.57% |
* Consumer Cyclical Sector Average
WLWHY
Woolworths Holdings
3.05
0.13
4.31%
COLM
Columbia Sportswear
55.00
-21.44
-28.05%
DDS
Dillard's
583.96
228.66
64.36%
KSS
Kohl's
12.69
4.33
51.81%
M
Macy's
17.72
4.68
35.91%
WWW
Wolverine World Wide
16.61
2.92
21.36%
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.