S&P cuts Woolworths Holdings

S&P said it lowered its long-term South Africa national scale rating on Woolworths Holdings Ltd. to zaA+ from zaAA.

The agency said the downgrade primarily reflects the substantial profit contraction that the group experienced in fiscal year 2018 due to weak operating performance in its non-food business in both South Africa and Australia.

“While the food business in South Africa remained resilient, the group's overall performance was hit by weak macroeconomic conditions in South Africa, a very competitive market and disruption from transformational activities at its Australian department store business, David Jones, and poor execution in its South African clothing business,” S&P said in a news release.

“This resulted in its unadjusted EBITDA dropping by over 14% in the financial year ended June 30, 2018, to ZAR 7.3 billion (about $505 million).”

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