Woolworths (WHL) – Whose market is it anyway?

In this note, we determine the underlying reasons for the weak performance in WHL’s SA Fashion division. By reviewing the strategy statements of management over the past 12 years, we identify certain strategies which we think may have contributed to the current underperformance. We argue that a key driver for the loss of market share may have been WHL moving its product offering upmarket to cater for a smaller, yet well-serviced high-income market segment. Furthermore, the inconsistency in the WHL SA Clothing offer – in its variation of fashion component from year to year, and its variation in the mix of “good/better/best”– may have been confusing to its customer base, in our view.