Woolworths (South Africa) has announced asset write downs of its store leases, as COVID-19 restrictions impact trading conditions.
The parent company of David Jones and Country Road Group confirmed the write downs concerned leases and store assets such as fixtures and fittings.
“COVID-19 had a significant impact on the performance of the Group in the second half of the financial year, and is expected to continue to do so for at least the remainder of the calendar year, given the fluid and challenging environment,” the company said in a statement to shareholders.
“This necessitated an assessment of the carrying values of assets, including the right-of-use assets relating to our store fleet.”
It comes as David Jones launches a sales process for its $1 billion property portfolio in Australia.
In May, investment bank UBS was hired to review options for David Jones' property portfolio, including its flagship sites in Sydney and Melbourne.
David Jones has already offloaded its menswear Bourke Street store in Melbourne, sealing the deal with property fund manager Newmark Capital for $121 million last month.
While store traffic has been impacted due to COVID-19 trading restrictions, eCommerce sales continue to grow for the department store.
David Jones sales in the last nine weeks of H2 declined by 8.1% relative to the prior year, an improvement on the prior eight-week period, as restrictions began to ease in most parts of the region resulting in a gradual improvement in foot traffic.
The decline in store sales was partly mitigated by the significant shift to online, which saw the channel growing by 100.7% in H2, and contributing 18.4% to sales.
Its Elizabeth Street store redevelopment was completed with all floors trading from April 4, 2020.
While the impact of lower foot traffic and the decline in tourism has been more pronounced in the CBD locations, the store is trading ahead of the remaining DJ store portfolio.
Meanwhile sister brand Country Road Group began a phased re-opening of stores from May 21 following a two month closure.
This resulted in a moderate improvement in trade with sales in the last nine weeks of H2 declining by 20.9%.
Sales in CBD and airport store locations continue to be significantly impacted.
Online sales remain strong, growing by 28.1% in H2, and contributing 33.5% of total sales.
The exit from Myer in August 2019 coupled with the closure of unprofitable stores at lease expiry resulted in a 5.3% reduction in its retail space.