WHERE TO INVEST: Woolworths' slowing sales show SA's upper-income shoppers tightening their belts too

South African shoppers are tightening their belts, according to recent data from Woolworths, a major retailer in the country. The company's Food division, which offers premium products, saw a slowdown in growth from 7.0% in the first half of the financial year (ending June 2025) to 4.4% in the second half (ending June 2026). While Woolworths' full-year sales still grew by 5.7%, the slowing momentum in the second half raises concerns for investors.

Comparing Woolworths Food's price movement to that of a value-focused retailer like Boxer, there is a noticeable difference. Woolworths Food's prices increased by 4.7% overall, while Boxer's prices decreased by 3.9% (excluding meat). This indicates that Woolworths is targeting a different segment of shoppers, with higher-income consumers being more cautious about their spending.

Clothing sales, a more discretionary category, also showed signs of distress. Woolworths Fashion, Beauty and Home (FBH) experienced a slowdown in growth from 6.2% in the first half of the year to just 2.6% in the second half. This is likely due to the timing of new winter ranges being stocked at the onset of the conflict in Iran, which may have impacted full-price sales during the initial season.

However, there are some silver linings. The Home and Beauty categories within FBH have performed well, with Home up by 11.7% and Beauty at 7.9%. These categories have higher margins than Food and are less seasonal than Fashion, meaning consumers need their products year-round. Additionally, South African consumers have shown greater resilience compared to shoppers in other countries, with Woolworths' share price down 16% year-to-date, outperforming some of its competitors.