* Aims to double share of S.Africa beauty products market
* Weak economic growth, competition hit earnings
* Headline half-year EPS drops 4.3 pct
* Truworths also reports lower profits
By TJ Strydom
JOHANNESBURG, Feb 16 South African retailer
Woolworths Holdings aims to double its share of the
country's beauty products market in three years, its chief
executive said, as the group reported a drop in half-year
South African retailers have struggled to grow earnings as
weak economic growth and clothing markdowns by competitors hit
sales, with Truworths International also reporting lower profits
Woolworths, an upmarket retailer which sells mostly clothing
and food in South Africa, has only a 3 percent market share in
cosmetics but its Australian department store chain David Jones
has a long relationship with beauty houses.
"We see an ability to more than double our market share by
2020," Chief Executive Ian Moir told reporters in a media call,
adding that the David Jones connection played a part in getting
Chanel and Estee Lauder into South African stores.
Woolworths' slender beauty offering was costing the business
shoppers, Moir said.
"We didn't have Chanel, we didn't have Estee, so we did not
have a beauty business," he said.
Difficult trading conditions and clothing markdowns by
competitors in both South Africa and Australia had hurt
earnings, Moir said.
Woolworths reported a 4.3 percent decline in headline
earnings per share (EPS) to 242.6 cents for the 26 weeks to Dec.
Headline EPS is the main profit measure in South Africa and
strips out certain one-off items.
The company also plans to open its first food store in
Australia, a business segment that has boosted Woolworths'
growth in South Africa, where it is now the second-largest
The group will invest as much as A$100 million ($77 million)
into this business over the next three years, Moir said.
Kagiso Asset Management portfolio manager Simon Anderssen
said signing up global cosmetic brands for its South African
stores would boost Woolworths' profits.
"Margins on cosmetics are usually lower than clothing but
sales and profits per square metre of space can be higher, and
expanding this category will help grow future earnings," he
Fashion chain Truworths International reported a
profit drop for the 26 weeks to Dec. 25, with headline EPS down
3 percent to 392.6 cents.
Shares in Woolworths were down 3.7 percent at 70.71 rand by
1326 GMT. Truworths' shares were 1.9 percent lower at 81.80
rand, while the JSE's All-share index was flat.
($1 = 1.2972 Australian dollars)
(Reporting by TJ Strydom; Editing by Ed Cropley and Susan