S.Africa's Woolworths targets Africa growth

BY AGENCIES

SOUTH Africa's Woolworths wants to triple African sales outside its home market over the next three years, its chief executive said, as the high-end food and clothing retailer forges ahead with plans to double its stores on the continent.

"Africa is still a relatively small percentage of our business, it's about 3 percent of our turnover, and will become 10 percent of our turnover in time," Woolworths Chief Executive Officer Ian Moir said in an interview with Reuters on Friday.

Moir said Woolworths, which reported 10.3 percent growth in sales in the first 20 weeks of its fiscal year, could post a similar rate of growth between now and Christmas.

"We're cautiously optimistic about trading between now and Christmas," he said, adding that the group's food and children's clothing divisions were "pumping and doing exceptionally well" while women's clothing was below expectations.

Shares in the Cape Town-based company, which are up 52 percent so far this year -- making the company the top gainer on the JSE Top-40 index -- closed down 0.9 percent at 40.37 rand, slightly lagging a 0.39 percent decline in the Top-40.

Woolworths, similar in style and products to Britain's Marks and Spencer Group Plc, plans to double its African stores outside South Africa to 120 by 2014, Moir said. Target countries include Nigeria, Uganda, Mozambique and Angola.

South African retailers have been accelerating expansion across the continent as international retailers such as Wal-Mart and Spain's Zara move into a continent that is expected be home to 2 billion people by 2050.

"Zara coming in is going to have more direct competition with us than Wal-Mart, but they are not going to come in with big volumes and they would not take material market share," Moir said.

Zara, the flagship label of Spain's Inditex opened its first African store early last month, in a posh suburb of Johannesburg. According to the Financial Mail magazine, plans are underway to open two more stores in Durban and Cape Town.

Moir said he was not worried about losing market share to Wal-Mart in Africa. U.S. retailer Wal-Mart paid $2.4 billion to take a 51 percent stake in South Africa's Massmart earlier this year.

"They don't really compete with us, they are a good business and they will change the dynamics in the marketplace, but we're less affected than others," he said.

Analysts say Wal-Mart -- which is also targeting expansion across Africa -- is more of a threat to South African mass market grocery chains Shoprite and Pick n Pay, whereas Woolworths targets more affluent shoppers.

"Wal-Mart don't really have any clothing that's going to compete with Woolworths and its food offering is targeting another market. Woolworths is in a league of its own," said Syd Vianello, an analyst at Nedgroup Securities.