Good day, ladies and gentlemen, and welcome to Woolworths pre-close briefing. All attendees will be in listen only mode. There will be an opportunity to ask questions when prompted. If you should need assistance during the call, please signal an operator pressing star and then zero. Please note that this event is being recorded. I'd now hand the conference over to Mr. Roy Bagattini. Please go ahead, sir. Morning, everyone. Jeanine Womersley here. Thank you very much for joining us. I'm sure you would have all seen the trading update and statement that we released on SENS about 2 hours ago, in respect of the 20 weeks of our FY 2022 financial year. This is the second time we're hosting a pre-close call. Our first was in June, which we did via a webcast. We're thinking now was to try a Chorus Call really just to enable a bit more sort of two-way interaction and hopefully provide a more engaging session. But really welcome your feedback. Do let us know your thoughts afterwards if this works for you. I'm joined today by Roy Bagattini, our Group CEO, and Reeza Isaacs, our Group FD. Maybe Roy, just hand over straight to you. Yes. For some opening remarks. Thank you. Thank you, Jeanine. Yes, good morning to everyone and let me add my warm welcome to all of you and thank you for joining us this morning. I'll kick off with a couple of, I guess, general remarks and then we'll sort of throw it open to a bit of a Q&A sort of session for the balance of the time. I think from the trading statement that we sort of released a couple of hours ago, you would have seen that we've had a particularly tough start to our 2022 financial year. Largely due to Australia, where we've lost 16 weeks of trade for over 70% of our business, given the lockdowns in New South Wales and Victoria. However during that period, I mean, we have seen a really strong online growth with CRG now, our Country Road Group, having more than 50% of their sales come through the online channel. We've also augmented our online sort of business there with the partnership with THE ICONIC and sales there are tracking really significantly ahead of our expectations. David Jones, on the other hand, we have now just over a third of our sales through this period being through the online channel. Very high online penetration rates for both those businesses, but clearly insufficient to offset the impact of the store closures. As a result, total sales have declined over the period. We're very pleased though with the way our teams have responded to these challenging conditions. As you'd expect us to, we've really intensified our focus on preserving cash. Pretty much what we did same time last year, more or less, as we were going in and out of different lockdowns there too. But we've really put a big focus on the way we manage working capital. We've reprioritized capital expenditure. We've reduced all discretionary costs. Unfortunately, we've also had to stand down a number of our staff, given that we did not have the benefit of the government's JobKeeper program, which you'd recall provided significant support to us and to our people last year this time. Notwithstanding those initiatives the impact of lost sales, I think coupled with the absence of the one-off support measures, negatively impacted the profitability of both David Jones and the Country Road Group businesses. That'll consequently impact the group as a whole for the H1. What is encouraging though to note is that we've seen quite a strong bounce back, a strong recovery since both those states have begun reopening and we've begun trading again. certainly across both those businesses, sales are tracking significantly ahead of our expectations for the moment. The teams are very focused on maximizing the critical festive period selling moment to sort of try and claw back as much as they can there from a revenue point of view. At the same time we also have not been immune to the disruption we're seeing globally in shipping delays. This is something our teams are managing very closely. We've been able to pull forward orders where we can to ensure that we have the right sort of inventory going into our stores in terms of newness, but at the same time having to manage the inventory positions that we have coming out of lockdown. Importantly to note though is that we're not veering off course. We continue to execute against our strategies and the commitments we've made to you in this, in regards to these two businesses. You should expect to see signs of that delivery coming through as we regain momentum in the H2 of our financial year. Turning to South Africa, I guess like, much of the industry, the broader trading environment has remained impacted by the factors that we're now all too familiar with. You know, COVID-19 impacts. We've seen the pickup in load shedding. Of course we've all sort of experienced the devastating impact of civil unrest in KwaZulu-Natal and parts of Gauteng. I think it's fair to say that, as a business, we probably came off less scathed than some of our peers. You know, the unrest did knock consumer confidence, and it certainly also disrupted a number of supply opportunities around certain product lines. From a divisional perspective, we saw our Foods business grow sales by just over 3%, which is a respectable performance in the context in particular of the period that we were comping. You know, last year at this time, we were delivering double-digit sales growth, and sort of 5%-6% ahead of market growth. You know, that was obviously supported by some of the tailwinds that we got through COVID-19 in terms of in-home consumption, and that was probably something that was always going to normalize as lockdown restrictions eased. Certainly if you look at our performance over a two-year period, we've grown sales by just under 15%, with the majority of that being organic, because, as you know, we've been very modest in terms of adding new space to our fleet over the last year. As we said to you, I mean this current period would be one of consolidation as we comp our COVID numbers, but from here we expect to look to build off the space and the team are working on a series of growth initiatives, and we look forward to sharing those with you in due course. In Fashion, Beauty and Home, our business there, we've begun to see some encouraging recovery in those businesses, particularly the Fashion business. We're still a few percentage points shy of our pre-COVID base, but more importantly the financial health, the underlying financial health, the profitability of the sales we're now achieving is much more in line with where we'd want it to go. We're seeing a much stronger trend in full price sales and you'll recall from previous meetings with you, it is one of the key focus areas that we've called out. You know, this was in part underpinned by the launch of a refreshed spring summer ranges, which we brought into market a little earlier. But also some of the deliberate shifts we're making in terms of our promotional strategies. In fact, our recent winter clearance sale was the most profitable sale that this business has had in several years. We'd like to talk a little bit more about that at some point. We've got a lot of questions that are coming in on the recovery, the timing of the recovery of FBH. You know, while certainly encouraging signs it's still too early for us to explicitly call that we've fundamentally turned the corner and we're on the way up. I think we have put in place a number of the right sort of building blocks, and I'm really encouraged by what we're seeing, especially in our fashion categories, including women's wear and kids wear, but also in terms of our beauty business. Across the South African operations, you will have seen we're still delivering a strong online growth. You know, we have pretty ambitious online growth plans, and we've targeted the Foods business to be in the high single digits%, FBH to be in the double digits% and we've continued to go after that, but not at all costs, to be quite frank. Online is a margin dilutive channel, and we're very mindful though that we need to get the balance right between being where the customer is at, meeting customer expectations, which we will do, but also mitigating the impacts of online on the overall levels of profitability. I guess just to recap a challenging start to the first 20 weeks. You know, we've been able to trade most of our stores in Australia, and we haven't had the support of JobKeeper and rent relief, which we did in last year's numbers. That's obviously negatively impacted the H1 performance. These are sort of unforeseen and somewhat out of our control factors, we have to find a way of dealing with that. As I say, very pleased that we're taking the right actions in that regard. Also to note our balance sheet remains really strong, Australia remains in a very healthy cash position. We're very comfortable with that. Overall, I think we're well positioned to capitalize on the sort of normalcy or the normalizing of trading activity that we see now emerging. I think this year is going to be one of a bit of a tale of two halves where we still see a little bit of the impact of COVID in this H1, whether it be as a result of the lockdowns or by virtue of the base effect that I've been talking about. Certainly as we move into the H2 and trading conditions recover, you should expect to see improved momentum as a result of the various initiatives we've very much still got underway. I'll stop there and you know, just let's throw it open to questions from the group. Thank you. The first question comes from Paul Svigars of Bank of America. Yeah. Good morning. Can you hear me? We can. Thank you, Paul. Hi. Hi, Roy. Hi, Reeza. Hi, Jeanine. Hi. Thanks for the opportunity. You've obviously given guidance already on the H1 earnings per share guidance, which you expect to be 20% lower. I was hoping you could maybe unpack the drivers of that. Clearly Australia is the big drag. I'm interested in SA Food and maybe a little bit more color on gross margin momentum and costs and what you're seeing in terms of investment in price in SA Food. Also in David Jones, I see the sales momentum, obviously the lockdown, but there was quite a lot of momentum on cost savings there as well. I'm just wondering, any more color on David Jones in terms of profitability for the H1. Thank you. Yeah. Paul, it's Reeza here. I'll maybe jump in there. Sure. You know, Roy and Jeanine can add, but you know, the profit guidance that we are giving is obviously very broad. You know, we are saying that based on- Mm-hmm. Based on our estimates profits will be down by more than 20%. We'll give you clearer guidance, I guess closer. to when we finalize sort of, I guess, our half year results, we do enter our biggest trading period of the year, November and December, obviously leading up to the festive season. There's a couple of reasons why we are calling out that our profits will be down on last year. The first obviously is the impact of the Q1, the trade impact, but also the impact of JobKeeper and rent relief that we had in the Q1 and the support that we had last year from government and landlords. The second is the sale of Bourke Street. Obviously that Bourke Street means that that profit came through in. was recognized in the H1 of last year. Then of course, we've got things like profit on the recognition of, or the recognition of some of the leases, lease exits, and cancellation gains. There's a few sort of numbers in there which is non-comparable, which makes the numbers actually non-comparable to last year. So Paul, and then just with regard to, I guess, the recent income statement, we're not giving guidance on margin and of course expenses. We'll talk to that in detail at the half year. Obviously from an Australian perspective, there has been a buildup of stock because of the lockdown, and we will be needing to clear that stock in the H1, as we get into spring/summer. Yeah. From a South African perspective, yeah, no major changes. Obviously, last year benefited from the higher volumes the sort of flywheel effect that that had on things like waste and rebates on the Foods business. We'll give more color with regard to that, at the half year. Reeza, just to confirm though, the Bourke Street men's profit from last year, that wasn't in the adjusted HEPS was it? No. Adjusted HEPS takes out all those funny and Right. We will obviously comment. I mean, we're making the statement of greater than 20% in respect of EPS, HEPS and Mm. adjusted HEPS. Exactly. Yeah. Yeah. Okay, thank you. Thank you. Great. Thanks all. Thank you. The next question comes from Mm. Funeka Maseko of JP Morgan. Morning, everyone. Can you hear me? Yes. Thank you, Funeka. Thanks for the time and thanks for the opportunity. I just wanted to get a little bit more color on the supply disruptions impact. It doesn't sound like it was as bad, but maybe you can you know, kinda give a little bit more color in terms of the reliance on China and the Far East of the South African businesses versus Australia. Maybe on a go forward basis, what the impact of the rising freight rates and shipment costs might have on your inflation, product inflation going forward? Yes. No, great question. Thank you, Funeka. I mean, so yeah, I mean, I think if you look at the different component parts of the group, certainly from a Foods perspective, sa there's very little impact from a supply chain disruption perspective. We have over 90%- Mm. of our product sourced locally. Mm. You know, there's you know so that's pretty much you know nothing there material. Even in terms of our Fashion, Beauty, and Home business, there are some impacts from an inflation perspective, cost inflation perspective that we're dealing with around 1%-2% which we'll basically manage through our margins and ultimately, if necessary, pass on to customers. But nothing material that or significant that would concern us for this, certainly for this financial year. Australia a little bit different in that context. Yes, they do get a lot of their sourcing from the China base. We are experiencing on average between two-four weeks delay in bringing new product in, and that's important obviously from a newness perspective and a refresh perspective. Mm. As we go into these different selling moments for us. but availability overall not being materially affected, something that the teams are managing well. You know, obviously this, the bringing of new stock needs to be sort of managed and juggled with the context of coming out of lockdown and the carryover of the stock that we've had from that lockdown and the way we're gonna manage that going forward. But again, in terms of fundamental availability, nothing that is overly concerning for our two businesses. Reeza, do you wanna comment a little bit on inflation? Yeah. Thanks, Jeanine. Yeah, with regards to inflation, I think, Funeka, within the Foods business, inflation we have been sort of a bit lower than I guess what maybe you guys would expect. Mm. The bulk of our product is obviously locally sourced. We've actually seen good harvest. You know, as the bulk of our product is fresh. And of course, we are continuing to invest in price. We've seen underlying inflation around 4%, but price movement at about 2.6%, which obviously demonstrates the- Yeah. the continued price investment within the business In fbh we've seen sort of 4%-5% inflation within FBH. Thanks, Reeza. Thank you. Appreciated. Thanks. Ladies and gentlemen, just a reminder, if you want to ask a question, you're welcome to press star and then one. The next question comes from Shamil Ismail of PrimaResearch. Hi there. Hi, Roy, Jeanine and Reeza. Just, can you perhaps shed some light on the difference between David Jones and Country Road growth rates? They're both impacted by the same lockdown conditions. The prior year, they both declined by about 11% and space growth also very similar. What can explain the difference in total growth? Thanks. There are a couple of things in there, Shamil. For a start, I mean, the sort of concentration of David Jones' business through the New South Wales and Victoria states and the location of stores is the factor. Also the CBD locations within those states where you know the David Jones business is disproportionately exposed to CBD locations, a second factor. Then thirdly, just you know the online businesses you know the Country Road Group business is significantly further along and developed as an omni-play omni-channel play. You know they've been able to sort of to some extent offset you know the loss of brick-and-mortar sales through their online platform. They have also within the last six months launched an initiative with a big marketplace player called THE ICONIC in Australia. And that's also been incremental to their business. Those would be some of the key factors that would differentiate why you're seeing the difference in decline between the two businesses. Shamil? Yes. That's fine. Thanks. Does that conclude your questions? Yes. Thanks. Thank you very much. The next question comes from Nomtha Ngumbela of Utomba Wealth. Thanks. Morning, everyone. Just one question from my si- Morning. My side. The last results you indicated sort of 10 consecutive periods of market growth, and you felt quite comfortable about your ability to sustain your competitive advantage. It does seem like competition, especially in the food division, is starting to intensify. Are you able to sort of provide some color on the stability of your market share? And any plans to just counter the growth of your competitors, especially in the online space? Thank you. Yes. Thank you for the question, Nontle. No, I mean, I think we sort of stay with what we've said with regards to our market and our relative market performance. You know, we obviously manage our business over a longer period not necessarily over a 20-week period, but for a six-monthly sort of process. But we do expect to sustain our levels of growth in the food business ahead of the market, going you know on a go-forward basis. You know, one would expect that on a full year basis, we deliver against that expectation for sure. Yeah, there's no doubt know the some of our competitors have made a bigger play into the online space relative to us. I think we were and we acknowledge that I think we're a little late to the game, particularly with regards to the on-demand component of our online sort of offering. You know, with Woolies Dash. We now do have Woolies Dash up and running across just under 20-odd stores across the fleet, and that will double within the next, in fact, in the next few months. You know, we are sort of looking at ensuring that what we do in that space, in fact does well in the sense of meeting the consumer needs here. We've been working at developing the proposition to the point where it does deliver against customer expectations. You know, we've got to the place where we more than 95% of our orders now are delivered either early or on time in that on-demand space. We're perfecting the underlying capabilities, ways of working and processes to ensure that as we scale that up, we scale it up in a way that it is ultimately successful. We're also mindful of accelerating our growth in this space and we're measured in our approach because we are looking at trying to strike the right balance between where our customers are at and what they're looking for, and frankly you know, the profit accretive nature of this business. so it is something that you know, we remain very focused on. Just in terms of the online as well, I mean, we are really the only retailer in the market that in fact has three different online formats or propositions. We have the conventional sort of online proposition where you can do your full grocery shop across the entire catalog and get that delivered in a couple of days. You have the on-demand that I've just been speaking about, Woolies Dash, which is the certainly within the hour or the same morning, certainly within the same day sort of proposition. Have a click and collect sort of component to that. We have three different formats and they all have different sort of economics. That go with it and they meet different customer needs. We're also in the process of integrating all three of those propositions into one single app, that makes it super convenient for the customer to basically, browse, shop and pay in a seamless way. The teams are working on that, and that should be up and running in an integrated format, by the end of our financial year. All right. Thanks, Roy. Thank you. Thank you. Ladies and gentlemen, just a further reminder, if you'd like to ask a question, you're welcome to press star and then one. The next question comes from Brian Thomas of Laurium Capital. Good morning, guys. Can you hear me? Yes, we can, Brian. Yes, Brian, thanks. Thanks very much for doing this call, and good luck with the AGM later today. Just maybe you can help us with understanding in the base year. If we go back to last year, what the impact of JobKeeper, and I guess the forbearance that you received in rentals in Australia was, at a cents per share levels? I think you did kind of ZAR 1.93 last year. Of that ZAR 1.93, how much was JobKeeper and the forbearance? Just help us kind of contextualize the extent to which that is coming into the next year's numbers. Brian, I think we shared with you what the impact of JobKeeper and the rent relief was last- I'm sure you did. I just can't remember it, Reeza, sorry. Okay, no, that's no problem. No. I know I was gonna give it to you. Don't worry. So for David Jones, I think we were about AUD 39 million, and Country Road about AUD 35 million. Yeah, yeah. You know, for those two businesses. Obviously that is the numbers of a pre-tax number. Then also what it doesn't take into account is, I guess, the impact of the lost sales in that particular period. I think we sort of gave you a broad estimate of what that impact sort of was last year. I think it should be fairly simple to- Mm-hmm. To calculate on a EPS level. Just a reminder, I mean, you can't look at it in isolation, Brian. You've gotta you need to take the lost sales and margin obviously into account when trying to sort of normalize the number. Look, I mean, what makes it difficult is that both bases are disrupted. It is a bit more of a difficult sort of estimate to make. You're comparing a disrupted base to a disrupted base. Yeah, it's not easy. Okay, thank you. The next question comes from David Smith of Investec. Good morning, team. Morning, David. Good morning. Morning, David. I've got two sort of linked questions. One, you've spoken about your expectation that earnings are gonna be down more than 20%. Is the expectation that your cash generation's gonna follow suit? Just to highlight sort of underlying versus accounting. Then the second question would be around the Australian business. Obviously there's been a big pickup of online during this period of lockdowns. How sticky are you expecting consumer patterns to change in terms of shopping online? And does it mean anything for your negotiation with landlords? Please give us some sort of update on how space reduction and rental reductions are going in Australia, and what that means for your H2. Thank you. Yeah, I'll take the first part of the question. Just with regard to cash, the EBITDA obviously in Australia will be impacted in the H1 because of the Q1s. It is significant. But we obviously have implemented, as Roy said, cash preservation measures in terms of working capital and a reduction of, or at least managing of, CapEx sort of more tightly. You know, the cash generation in Australia in the H1 will be negatively affected. But in South africa we it is... I mean, we've got the dividend obviously that we paid in the month of September in respect of the previous financial year. Again, in SA also we just we looked at CapEx quite closely and we managed intact as well. Definitely in Australia, but to a lesser degree South Africa. Just to your question around online. Yeah, I mean, I think there has been obviously an exponential jump in the online growth here for both those businesses, as you would expect when access to brick-and-mortar isn't available. We've seen from previous you know sort of cycles of lockdown and then reemergence to normal and then back into lockdown and coming out again, David, there is an you know a level of stickiness, but not to any significant extent. It's just a natural underlying growth in online shopping which is sort of supporting the proportion of online sales relative to brick-and-mortar growing over time. On a normalized basis or certainly pre these lockdowns the Country Road business was tracking at just over 30% of its total revenues through its online channel. You know, during this period, it was over 50%. We expect that to sort of come back down to the sort of the above 30%, a third or so of the business, but then continuing to grow from there. Probably plateauing out at a point. David Jones similarly, they were just under 20-odd%, 17%-18% of their business through the online channel. This obviously accelerated to way past 20%, but will come back down to around that 20% level. What has been interesting in the last sort of three-four weeks as stores opened up online sales have declined quite a bit, as people have just got out and gone into malls and stores and we're seeing brick-and-mortar sales really, as I say with a bit of a strong wind down there. You know, anticipating some of that momentum to play through at least to the back end of this year. That's something that we're obviously managing. We're also increasingly managing the business in more of an integrated channel way an omni-channel sort of way where online and stores are now sort of crossing over increasingly in terms of the customer journey. Appreciating what that means and how to best sort of intersect with that customer journey, whether it's through a brick-and-mortar or an online sort of opportunity, both from a brand building as well as from a commercialization transactional perspective. We're sort of managing the business and the customer experience on that basis. I mean, in terms of the question around space and landlords we have sort of put out a commitment around space reduction, which we're still confident in delivering against. You know, we accelerated that, and in fact towards the end of our last financial year, we did actually make an announcement around a further sort of arrangement or deal that we've been able to strike with one of our major landlords there, taking a further 50,000 sq m out of that fleet. Which in and of itself accounts for around 9% of current space. So some significant, relatively speaking to where we were, I think some good progress being made in overall space reduction plans and strategies there. These moments of lockdown certainly give an opportunity, provide an opportunity to engage landlords in a different way, but the latitude that you have to sort of fundamentally shift longer term lease conditions is relatively limited. Certainly through the period, we're able to negotiate different levels of abatement and different levels of support out of the landlords. On a normalized basis, the latitude to sort of shift significantly on space is always gonna be challenged. We're making good progress with regards to the the plans and the targets we've laid out around space reduction, and we should continue to see that happen. Thank you. One cheeky follow-up. Yeah. Go ahead. It's a knee-jerk reaction down today. Yeah. At what point do you guys feel that it's attractive enough that you wanna do buybacks? What will it take in balance sheet terms and share price terms for you to ramp that up? Yeah. David, I mean, look, it's something that we'd always actually keep an eye on, but at the end, look, we're very aware of the low cost of debt at the moment and the need to have an efficient balance sheet. You know, you need to be very judicious in terms of making sure that it is accretive at the end of the day. We're keeping a close eye on it. I won't sort of comment further just in case I get myself into trouble. You know, we do keep a close eye on it, David. Vague but useful. Thank you. Thank you. Thank you. The next question comes from Zenande Meyiwa of UBS South Africa. Good morning. Morning, management. Thank you for taking my question. Just two questions. Apologies if I'm repeating this. My line cut during the call. Just on the Dash app, do you have any metrics that you could disclose for us, just to gauge the traction? Any numbers around monthly active users and stores that you currently service? Suppose maybe the second question, just on the fringes. Just on the insurance payments on the back of the disruptions, do you think the scope that you might have to pay slightly higher premiums on the back of that? Just a question on the fringes. Thanks. Yeah, sure. I mean, there are a couple of sort of, I guess, metrics that we're happy to share with you around Dash. There are a couple that we typically don't share. I mean, at the moment, out of the 19 stores that we have Dash linked into, yeah, we sort of drive just around between 2,000 and 2,500 orders every day during the week, as I said, a 95% sort of on time delivery. We have, Zenande, we've introduced a delivery fee in the last several weeks of around ZAR 35. You know, because there's a maximum basket size given the you know the delivery capacity and capability. We've also introduced the opportunity to tip the driver, which was a request we were getting back from our customers. We have a very specific and targeted marketing campaign to increase order volume. We've now also sort of linked you know our on-demand sort of service to our Nicolway Woolworths store. You know, a couple of things going into that space. increasingly tracking you know customer feedback and using that to evolve the overall proposition. We are at a point where collectively we feel we can now scale that in a measured way going forward. And hence, as I say, we'll double the number of stores by the end of the year to about 40-odd stores. And then, as I say, fairly judiciously continue to roll that out. Importantly, as I say, we're integrating the Dash format with our Click and Collect, as well as our more conventional online service delivery opportunity as well. In terms of your question on insurance and insurance premiums we obviously have been through a bit of a process, given what we experienced. We're not anticipating any material movements on premiums as a result of you know, our process there, so. Sure. Thanks. Just one last question. Thanks for that. Just on the move to be less due to formal wear and having a mix of athleisure and casual. How should we think about the mix so far? Yes. I mean, I think so. It's a great question because you know we saw for the most part of the last period, I mean a shift out of formal wear into athleisure and casual categories. In fact in our stores across South Africa, we were very much over-indexed in the formal wear categories, both in terms of women's and men's wear. We've made some deliberate calls to sort of shift those that representation or that mix within our stores down to something that is more in line with where the market is. We've actually successfully been able to do that over the course of the last six to nine months. Now we certainly in a position that we feel more comfortable with. That's through the introduction of athleisure and other casual wear categories growing. What has been interesting in the last, I guess a few short months, we've seen a little bit of an uptick back into formal wear again. I guess to some extent as people start to return to work and have the opportunities to go out a little bit more and certainly to different types of occasions. We've seen a smart wear sort of level of smart wear penetration growing. You know, the overall mix remains pretty much sort of a 75%/25%, 80%/20% in favor of casual wear to formal wear. Zain, what I can add to that is that over the period that Roy has alluded to, we've shifted roughly, say, 5%-10% of the mix out of formal into casual across both men's and women's. Okay. No, thank you. Thank you. The next question comes from Damon Buss of M&G Investments. Hi. Morning all. Can you hear me? Yes, we can. Yes. Thank you. Okay. Thanks so much for the time. I just want to ask around the fashion business, can you give us some more insight into what you did differently in this winter sale to make it the most profitable one you've had in a long time? Just a little bit more insight into kind of why you brought the spring and summer ranges forward or kind of launched them a little bit earlier. Yeah, I mean, I think fundamental point here for us, Damon is just I guess better understanding the customer, and bringing product that has a higher probability of resonating at a moment in time. The confidence I think that the team have in doing that allowed us to sort of, reduce the number of days on promotion and the level of the depth at which we went into promoting our product. As a consequence, we were able to sell through more at full price. We played around, should I say. We actually experimented with different sort of mechanics in terms of the promotional process itself and the timing of the discounts that we introduced. You know, typically, for example, we would go on promotion across the store all at the same time across all product categories. We were much more targeted in the approach we took this time around, looking at specific categories that we took a little deeper while others we stayed at full price, for example. The benefit that we now have certainly of being able to leverage the data that we have in the org... You know, in the group now and the analytics, that team that provides some of those perspectives and insights allows us to make some of those particular calls. Just as I say, trialing and learning through the different processes of being much more granular and targeted in our overall approach, there. Can I maybe just add one or two comments to that? We didn't go as broad. It was a lot more targeted. And the depth of the discount wasn't as great because it was more informed than what we've done previously. You know, too, and I think Roy's spoken to this point before, but we have spent historically far too much time on sale or on promotion throughout the calendar year. In this FY 2022, we're gonna be taking, roughly speaking, about 10 weeks out of our promotional and markdown calendar. And that obviously should have a positive impact on profitability. Okay, thanks. That's very useful. Can I just sneak one more in? Just on the cash balances within Australia, so obviously it's been a very tough period, but at the last results you split out the cash in Country Road and in David Jones. Can you just give us a sense on kind of where those cash balances are now sitting for those two businesses? Are they both still net cash or has one been impacted far more than the other? Yeah. Damon, we will share those numbers with you know, at the half year. Obviously, you've got to take the the working capital cycle into account. Of course, I mean, we sort of hit sort of peak working capital utilization or cash utilization sort of October, November. Of course we come out of that as you trade through December. We'll share that with you at the half year. nevertheless David Jones is positive and so is Country Road. To Roy's earlier point, we we are in a strong position from a balance sheet perspective. Okay, perfect. Thanks very much. Sure. The next question comes from Asad Jeena of Nedbank. Okay, thank you. Hello? Sorry, Asad, we can't hear you. Unfortunately, Asad seems to be having some technical issues on his side, and he's gonna be rejoining the queue shortly. We have a follow-up question from Funeka Maseko of JP Morgan. Hi, guys, again. Hi. I just wanted to follow up a question on, just to allay, I guess, the cash conversation. Is it fair to assume that the interim dividend or the near-term outlook for dividends will still be funded out of the South African earnings? Perhaps while I have the mic, just a brief comment maybe on WFS. I see that small book growth but growth nonetheless. If you could give us some colors to the key drivers there. Is that increased acceptance rates? Is it increased volumes of applications? Are you increasing account sizes to existing customers? Just some comments on there would be helpful. Thanks. Yeah. Funeka, just on the dividend sort of question. Yeah, it's yeah, we will be. I mean, all things being equal, a dividend will be we will continue with the dividend out of South Africa. It's not that the group dividend will be paid out of South Africa. It is the South african will be paid out of the South African earnings. That's the some of the guidance I can give you. And the Yeah. The second part of your question was with regard to. WFS. WFS. We are seeing a rebound. Also remember last year we were also sort of coming out of a period where we actually had to make some significant adjustments, especially that macroeconomic variable adjustment of alpha is 9 in the H2 of FY 2020. Of course that book was then adjusted for that. The coverage ratio was much higher. Mm-hmm. Obviously now we're coming out of that and we're comping effectively that sort of adjusted book. Yeah, we're seeing customers coming out of forbearance and relief and it's sort of a combination of things. I mean, we are seeing some uptick in demand in the unsecured space. Appreciate it. Thank you so much. Thank you. We've been rejoined by Asad of Nedbank. Please go ahead, sir. Hi, guys. Thank you for the opportunity. Just a few questions from my side, please. Just in terms of price movement in SAFEX, the 6.2%, can you just explain the drivers of that? Especially while sort of anecdotal evidence on the ground suggests that on the basic side your pricing points have become a lot more competitive versus previous years. I just wanna understand what's driving the price movement, please. That's the first question. I'm very happy to take that question to Asad. Hi. Yeah. It's really just a function of sales increasing or having a greater proportion of full price sales. Okay, cool. That's simple. Okay, cool. Just on the second question on FBH. Sales decline of about 7.4%. Obviously that's not reflected fully in the Q1 and 20-week number. Is that just a timing issue? You know, will we be seeing that impact coming through as the year progresses? Yeah. I'm happy to take that. Yes, there is obviously a timing impact. You would see that fully reflected in the full year numbers. That said, we obviously do have a series of initiatives underway which we've spoken to, strategic initiatives underway to drive sales across the comparable store base. Plus we are growing the online business. We would look for that to offset the targeted space reduction strategy. Okay, cool. Thank you. On food, do you guys have a number for the liquor sales growth? Or- We don't disclose that. You don't disclose that. Which I think that's what largely because the liquor business for us is really small. It's literally just a percentage point or 2% of our Foods sales mix and quite a nice growth opportunity for us. Given the small contribution, that's why we don't split it out. Okay, cool. Then just one last question. Sorry. On David Jones. Scott Fyfe, the new CEO, is in the role now for I think about a year. Can you guys maybe just talk about his achievements, the progress he's made, the initiatives that he's made in the business over the last 12 months? Then maybe talk about areas that you think there's still work to be done in David Jones over the sort of medium to longer term. It's more of a strategic question. Yeah. No. I think a good one, too. I mean, I think we've spoken at various points in time, Asad, around some of the things we needed to sort of get right to sort of demonstrate whether there's enough of a business case here around David Jones. You know, we've focused very. I mean, the work that has been done, I mean, we have reset the strategy for that business, as you would appreciate. That we did some time ago now, just over a year or so ago just as Scott came into the role. We've worked quite specifically on the merchandising strategy, the product strategy across that business. Again, trying to ensure that we had an a compelling proposition across a range of different price points, and mix of brands. Typically on an exclusive basis which has allowed us to then also trade the business very differently to what we were doing up until that point in time. To that end, you would have seen from our results, coming into the back half of last year, we were actually growing our top-line know encouragingly. That has always been an issue in that business for several years now. You know, big focus on top-line margins through a better product and price promotion approach to the business, trading the business very differently. That we would want to you know see ourselves getting back to that as we come out of the lockdowns and certainly into our H2. We've done quite a lot of work on the cost base. We did sort of target ourselves you know taking out around AUD 20 million on an annualized basis. Pretty much on track to do that. One of the big factors that we had to deal with was candidly a bit of an ill-informed food strategy which was you know costing the business very significantly. You may recall, we were talking about somewhere in the region of around AUD 15 million or so loss-making EBITDA annually. We made a commitment to sort of resolve that, and in fact, within this financial year, we're absolutely on track to deliver against that. Some big work done on the food component of the business. Similarly with the landlords we've continued to chip away at this significant sort of level of leases that we have, number of stores. You know, we are over-stored. We have we've begun to tick down in the number of stores. You know, about 18 months or so ago, we were up at 48, 49 stores. We're down to 43 and a bit now because some are open and haven't reopened fully, but around 43 odd stores. You know, we have a pathway to continue to reduce space overall through store closures and making some of the bigger stores smaller, essentially, and handing back space in that process. We've committed to a 20% space reduction there, a further 20% space reduction there. Quite a lot going on here, as we, as Scott has also sort of done quite a lot of work on his team. We've configured different ways of working. We've set up the structures a little bit differently. You know, the business has got some way to go to sort of prove out some of these initiatives. You know, unfortunately, the timing of these Australian lockdowns was not great. I mean, you will have seen we were picking up quite a bit of momentum coming into the back end of last year. We went into lockdown sort of in mid-June, and we've just emerged from them. That was a bit of a setback to say the least. You know, I think we've. You know, we've got what we need in play to sort of get back to that level of momentum, certainly in the H2 of the year, is what we're targeting. Great. Thank you very much for that, detailed response, Roy. Thank you. Pleasure. Thanks, Zaid Manjra. Thank you. Ladies and gentlemen, just a final reminder, if you'd like to ask a question, you're welcome to press star and then one. We have a follow-up question from Paul Svigars of Bank of America. Yeah. Hi, guys. I just wanted to follow up on the supply chain questions that Funeka asked. You know, we've seen obviously the freight costs which have risen fourfold, but you've got lots of input cost pressures as well, cotton, polyester, viscose. Every you name it's up 30, 50% in dollar terms. As you look forward, do you think you can manage that through. You know, it sounds like in South Africa, lower markdowns are clearly gonna be helpful for gross margins. But just qualitatively, do you think you are going to see pressure on your gross margins, especially in Australia this year? Or do you think this is normal course of business and there's other levers you're pulling that should offset? Are those pressures to drive better gross margins? Specifically talking obviously apparel here. Yes. Thank you. Yeah, Paul, I mean, it definitely is price pressure. You know, supply chain disruptions, increased costs of freight et cetera. we we're looking probably at about sort of 100-200 basis points increase in cost of goods. I mean, obviously recognizing that 30% to about a third of our business is actually within the SADC region. But Mm. We know, from a margin perspective, we feel that we can manage within the current margin that we've gotten, actually improve margin actually through lower markdowns and promotions. I mean Laurie alluded to that sort of earlier. That's really clearly a focus of obviously of management. Mm-hmm. Reducing the margin sorry, the markdown activity that we undertake and managing that sort of margin obviously closely. We- Mm-hmm. We see more than enough sort of space within that to manage within that. Paul, if I could just add to what Reeza said specific to the FBH business. Now, one of our other initiatives. Mm-hmm. It's actually sort of either to amplify and reduce the breadth of the offering or to go deeper in volume, and we are consolidating part of the supply base as we do that. Just by way of example, in FY 2021, I think we took about 15-20% of our program through this process, and in that achieved about a five percentage point reduction in our input cost on that product. That is a further opportunity for us to obviously offset some of this some of the increase in global freight rates that we're seeing. The net of it, you should expect GP margins to move up from here, not down. Okay. That is the same for the Australian, David Jones and Country Road business? No. In Australia, I think it's fair to say that there is a bit of a headwind to GP margin. It's not just the freight costs. It's also obviously the fact that we've been in lockdown for a significant component of the period and do have some inventory that you know would understandably need to clear. Okay. No, that's very useful. Thank you very much. Yep. Thank you. Ladies and gentlemen, there are no further questions on the lines. I will now hand over to Mr. Roy Bagattini for closing comments. Yeah. Well, thank you. And once again, thank you to all of you for dialing in and giving us an opportunity to provide you with a bit more perspective on what clearly at a level is a disappointing sort of start to the year for us. You know, I think, notwithstanding I think, the underlying sort of initiatives and processes we've got underway, I mean, we're confident, and certainly I am, that we're going to sort of restore some of the momentum that we've lost. Very little that unfortunately we could have done about these government-imposed lockdowns. Very confident the team have what it takes to sort of claw back as much as we can and then sort of go into the H2 with a little bit more momentum. Still a lot of self-help opportunities across the business. You know, the teams are sort of obviously busily focusing on that. We look forward to, I guess, re-engaging with you, some of you over the next couple of days, but certainly when we sort of get together around our half one results in February. If there are any more questions or if you have any more, please shoot them over to myself, Reeza or Jeanine, and we'll get back to you on those as soon as we can. Really appreciate your time. Thank you very much for dialing in to everyone. Thank you. Thank you all. Thanks. Thank you. Ladies and gentlemen, that concludes today's event. Thank you for joining us. You may now disconnect your lines.