30 September 2008


Investors watching as the value of their investment in Woolworths fell from 20p to 4p over the last year may be surprised that the Woolworth's Group Balance Sheet appears to be holding up quite well.

Falling share prices are not new to Woolworth’s shareholders, during the year to February 3rd 2007 investors saw the value of their investment fall from 34p to 11.5p, but then too Net Assets held more firmly. According to the Company’s annual report to 2nd February 2008 Woolworth's Group Net Worth was valued at 21.63p per share. The previous year, Woolworth’s Group Net Worth stood at 21.76p per share.

Put simply, despite dramatic falls in Woolworth’s market capitalisation during 2007/8, the Group's year on year Net Assets Value, or Shareholders Funds, was largely unaffected.
Looking at Woolworth's Interim Results, released last week, and the first since Stephen Johnson took the helm on the 1st September 2008; Woolworth's Net Worth has slipped to 16.12p per share. Looking more closely, however, most of this fall can be attributed to Woolworth's historically weak first half, which excludes the crucial Christmas period. That said, comparing like with like, Woolworths' Net Asset Value reported at 4th August 2007 at 18.36p per share indicates a deterioration in underlying worth of 14% to 2nd August 2008.

Nevertheless, IF, and in the current economic climate it's a big IF, Woolworths deliver a good Christmas to their shareholders then it is possible that Net Assets at the year end could be worth as much as 18.5p per share.

With Woolworth's Group shares bobbing around at the 4p mark and valued at just quarter of their reported Net Asset Value it is hardly surprising that Woolworth's live under the constant threat of takeover. The reality of the situation now is that if the Board of Woolworths cannot put shareholders assets to work profitably then somebody else will.

Related articles:

Recent Comment

Woolworths Could be Forced Into Administration

Property Tycoon Eyes Woolworths

Woolworth's Freeze Out Iceland

No comments: