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Woolworths says the problem with its struggling fashion business is not only weaker sales but also gaps in the quality of the products it offers customers. New CEO Sam Ngumeni told Business Day that customer feedback had made it clear that improving product quality was a priority as the retailer works to strengthen the fashion, beauty and home (FBH) division, which at present is outshone by food. “We are definitely not turning our back on fashion,” Ngumeni said.The comments come as Woolworths reshapes its strategy around its buoyant food division, which it has identified as the main engine of the group, while reviewing the role and performance of its other businesses.For fashion, Ngumeni said the focus was on understanding where the product offering was falling short and how those gaps could be addressed.“Our customers have been very clear that the quality of the product is probably … what we need to get right,” he said.Woolworths South Africa’s FBH business posted turnover and concession sales growth of 4.4% in the 2026 financial year to end-June. However, adjusted earnings before interest and tax fell 14.1% to R1.38bn.The company said its fashion performance was weaker, particularly in the second half of the year.The division’s gross profit margin fell by 130 basis points to 46%. Woolworths attributed the pressure to its investment in Kidswear prices, increased promotional activity and the clearance of excess stock after weaker-than-planned sales in the final quarter.Fashion inflation was 0.9% for the year.While Fashion remains part of the group, Woolworths is changing how it looks at its different businesses. Ngumeni said the group was conducting a detailed review of its businesses to understand their position and determine the path to better performance. The review includes Fashion, Food, Financial Services, Home, Beauty and Country Road.The process will also determine the milestones, time frames and resources required to improve each business.This is part of a wider change in how Woolworths plans to allocate capital. Ngumeni said food had a distinctive competitive advantage and played a central role in driving customer visits, loyalty and basket size. As a result, the retailer will allocate capital towards areas where it believes it can achieve the highest returns and customer value.The strategy does not mean fashion will be abandoned. According to Ngumeni, Woolworths still believes fashion is important to the group and that the business needs to close gaps in its product offering.“It is a higher-margin business. But it does not create the economic returns of the food business,” he said.The group is also reviewing the role of Beauty and Home as part of the broader strategy. Woolworths said these categories could help extend the relationship it has with food customers into a wider lifestyle offering.It is a higher-margin business. But it does not create the economic returns of the food business.— CEO Sam NgumeniBeauty sales increased 7.9% during the year while home sales increased 11.7%.The broader strategy follows a difficult second half for Woolworths, with the company citing weaker consumer demand, higher fuel prices, inflation and increased operating costs.The group also acknowledged a longer-term issue with its brand execution. Ngumeni said Woolworths had not consistently delivered the brand experience it promised customers over the past decade.Ngumeni, who previously led Woolworths food, took over as group CEO in June after Roy Bagattini retired at end-May.Country Road Group, Woolworths’ Australian business, returned to full-year profitability during the period. Sales increased 1%, while adjusted earnings before interest and tax increased to A$2.3m from a loss of A$18.1m in the previous year.Woolworths said its immediate focus for Country Road was to continue its recovery.Business Day
