South African retailer Woolworths Holdings said on Friday that total group sales for the 53 weeks ended June were up 15.5 percent compared with the 52 weeks a year ago, while they were up 13.7 percent for 52 weeks compared with a year ago.

Comparable store sales growth was up 8.3 percent for the 53 weeks, it said.

The company said in a trading update that trading conditions in the second half have deteriorated substantially with a further decline in consumer spending as a result of additional interest rate hikes and increases in fuel and food prices.

"Middle and upper middle income consumers have felt the pinch of the current economic conditions particularly strongly. This is the heartland of the Woolworths customer. We have accordingly adjusted our opening price point offer and given our continuing insistence on quality, our range now is extremely competitive," it said.

The group said trading space in Woolworths retail increased by 4.8 percent in clothing and general merchandise, and 14.4 percent in food at the end of June 2008, compared with the prior year.

Woolworths Financial Services' combined debtors books at June 2008 were flat against June 2007, although the average books for the year were 12.6 percent higher than the average for 2007.

Interest yields increased to 23.5 percent (2007: 19.9 percent) and net bad debt expressed as a percent of the gross book, increased to 7.9 percent (2007: 4.9 percent). There are some early indications that bad debt may have peaked, the group said.

At the time of the interim results, management undertook to reduce cost growth for the second half and was successful in achieving this. The Australian operation, Country Road, has shown resilience to the global slowdown, returning record profits, it said.

Growth in profit before tax and non-comparable items in the second half is expected to be positive.

Headline earnings per share are adversely impacted by a R50-million non-comparable IFRS2 charge relating to the group's broad based BEE scheme and an increase in the effective tax rate of 8 percent as a result of the effect of last year's recognition of the deferred tax asset in Country Road and of STC on share repurchases, it added.

On 17 July the South African competition authorities approved, without any conditions, the acquisition by Absa of a 50 percent plus one ordinary share of Woolworths Financial Services. The remaining conditions precedent are expected to be met by 31 August.

The group's financial results are scheduled to be released on August 21.

At 1.25pm on the JSE, Woolworth's share was 35 cents, or 3.54 percent, higher at 10.25 rand.

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