Woolworths South Africa is contemplating write-downs in its David Jones investment after the Australian department store reported a further deterioration in sales.
In a December quarter update, Woolworths says half year sales for David Jones were 3.3% lower on a comparable basis and 3.8% lower in total.
However, sales performance improved in the last six weeks of the half, with sales increasing by 0.6% in comparable stores.
Country Road Group sales increased by 5.2%. Sales in comparable stores, which exclude Politix acquired in November 2016, fell by 1%.
The company says its is looking at a “reassessment of the carrying value of the David Jones’ assets”.
David Jones and competitor Myer have been hit by the retail crunch, an increasingly highly competitive market with digital players making inroads into market share and consumer sentiment keeping spending down.
Morgan Stanley analysts say department stores are most at risk from severe disruption as Amazon rolls out its retail offering in Australia.
Myer’s latest update showed the department store sales to the end of November were down 2.3% and down 1.8% on a comparable store sales basis.
At David Jones, Woolworths has been restructuring the business since 2014 when it paid $2.1 billion for the Australian stores.
In the latest quarter results, the company says net retail space was reduced by 2.2% in David Jones and by 3.8% in Country Road.
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