Good morning, and welcome to our 2023 annual results presentation. I'll kick off our presentation today with a high-level overview of our performance for this year before handing over to Zaid, our head of finance, who will go into some detail regarding our financials. I then look forward to sharing with you how we have performed against the commitments that we've made to you over the last couple of years, and how we've been through a period where we have fundamentally fixed, strengthened, and repositioned our group. More importantly, how the progress we've made here now enables us to evolve our investment thesis to really leverage the group's foundational strengths to optimize and grow our business. Then after that, as always, we look forward to engaging with you and responding to any questions you may have.
So let's start off with an overview of what has been a truly transformational year for the group. Firstly, I want to point out that our results are not directly comparable to those of last year for three reasons: the sale of David Jones, which I'll discuss a bit later, base effects in Australia, and obviously, significant macro headwinds, including the continued pretty severe load shedding we've been experiencing here in South Africa. Notwithstanding these factors, the group turned in a really strong result for the year, as we delivered on our strategies and what we'd identified as our self-help opportunities.
On a total basis, which includes 9 months of David Jones in this result versus a full 12 months in last year's numbers, we have grown sales by 7% and AEBIT by 21%, resulting in ADHEPS of ZAR 5.08 per share, up 36% on last year, and the highest earnings per share we've ever achieved in the history of the group. I'm also pleased that we've been able to increase our dividend by 36%, and Zaid will talk to this more in detail shortly. From a divisional perspective, I'm very pleased by the improving momentum in our Food business, which has delivered a strong top-line result and a higher GP margin, notwithstanding our ongoing investment we've been making into price and having also absorbed the additional costs associated with load shedding.
While our apparel businesses saw slower second half trade as a result of various headwinds to discretionary spend, similar to our Foods business, both Fashion, Beauty and Home , and Country Road Group delivered improved GP margins. This is a particularly notable achievement in the context of a highly competitive and promotionally driven environment. I am particularly pleased by how, as a group, we are allocating and managing our capital, and that's resulted in a number of benefits, whether it be in respect of our capital structure, dividends, or share repurchases, all of which Zaid will talk to a bit later.
As I mentioned at the outset, our results have been achieved in the context of what proved to be a pretty challenging trading environment, and it's worth taking a moment to talk specifically about load shedding, which continues to have a pronounced impact on our South African economy, as well as on business and consumer confidence. Load shedding mainly impacts our predominantly fresh food business, where we've experienced almost 5,000 hours of load shedding this year, resulting in increased waste and diesel costs across our stores and supply chain to the extent of around ZAR 20 million-ZAR 30 million a month. It is important to note that we have not passed any of these incremental costs on to our customers. We've ring-fenced all of our load shedding costs so that as and when load shedding dissipates, you'll see these savings drop to our bottom line.
Throughout this period, while we are actively finding ways to minimize the operational and financial impacts of extended power outages, our primary focus was, and always will be, on protecting the integrity of our brand and the uncompromising quality of our product. That's because of our eight-minute rule. Simply put, if our cold chain is broken for more than eight consecutive minutes at any point, from harvesters to store shelves, we consider this product not fit for sale, so that our customers can rest assured that our products are always fresh and always last longer.
Our Woolies difference has never been more evident than it has been throughout this period, and that's as a direct result of the investments we've made over many, many years in our unique supplier partnerships and our value chain, all of which is driving increased footfall into our stores and fortifying the deep trust and loyalty our customers have in our brand. Now, arguably, the biggest game changer for us this past year has been the sale of David Jones. We all know that the David Jones chapter has been a painful one for the group and our shareholders, and so successfully concluding the sale is not only well-timed, but more importantly, is transformational for the group on multiple fronts. We have removed ZAR 18 billion in liabilities from our balance sheet, driving what is effectively a step change in the group's return on capital employed.
Importantly, it's also enabling us to shift our full attention to our core Woolies and CRG businesses. I know a number of you have been waiting for us to share the specific details of the outcome of the sale process. We haven't been in a position to do so until now, because, as you'd recall, whilst legal completion took place at the end of March, we then needed to work through a fairly complex completion accounts process with the buyer, which required a couple of months. We've now concluded this process and can finally put this chapter behind us. So insofar as the value that we've realized from the sale is concerned, there are a number of components to this. Firstly, ahead of the sale, we extracted ZAR 3.3 billion of cash from David Jones.
We sold the operating entity for just over ZAR 1 billion, a value well in excess of carrying value. We still own the flagship Bourke Street building, which is worth north of AUD 250 million, and we'll consider how best we realize value from that asset, too, when the time is right. So all in, we've unlocked ZAR 7.7 billion of value through this transaction and a number of associated initiatives over the past 2 years. But it's also worth highlighting that we've created further value by deploying a large portion of these proceeds to buying back our own shares at a price well below our intrinsic value. The biggest benefit and the most transformational aspect of this transaction, however, is enabling the reallocation of capital and management attention to Woolworths and CRG.
Whilst obviously not easy to immediately quantify, the benefits of, the benefits of this will become increasingly evident over the coming months and years as we intensify our focus on what is the more value accretive initiatives across these businesses. Another highlight for us is our Good Business Journey. Every year, we make strides in our sustainability journey, and this year is no exception, and that's made possible by the fact that we have been investing time, capital, and expertise in our Good Business Journey since 2007, building the deep knowledge and skill set that enables us to realize our ambitious goals and to really lead in this space. A key focus area for us is how we source.
As a largely private label business with equally committed suppliers and an integrated supply chain, we're able to not only support our partners with their own sustainability strategies, but to ensure end-to-end visibility right the way through our value chain, from farm to fork, and from the factory floor to all of our stores. In the current year, we demonstrated our deep commitment to ethical sourcing by becoming a foundational member of the ETI, the Ethical Trading Initiative. It's an alliance of companies, trade unions, and NGOs working together to collectively promote respect for workers' rights across the supply chains. We're also actively taking steps towards building a thriving and resilient environment.
We are the first South African retailer to introduce electric vehicles in our online fleet, and in Australia, Country Road launched a climate fund to provide AUD 1.5 million of grant funding towards projects mitigating climate change and building climate resilience. Our deep commitment to our GBJ is also reflected in how we reward management and how we make our financial decisions. Executive incentives now include a sustainability component, and we have linked more than 80% of our debt to the delivery of specific sustainability targets. Our Good Business Journey allows us to make a demonstrable difference to our communities, too, be it through our Farming and Fishing for the Future programs, our MySchool, MyVillage, MyPlanet loyalty program, or the almost ZAR 900 million worth of surplus food that we've donated throughout the year.
In fact, we've contributed more than ZAR 1 billion to social causes across our group in the past year alone. While we can look to make a difference externally, where we really have the most control is internally. Adding quality to life for our own employees is a fundamental cornerstone of who we are as an organization and what we stand for. Central to this is our Just Wage initiative. In April this year, we again increased our minimum South African hourly base pay, with this now being more than 20% above the retail sector average and almost 60% above the national minimum.
This gap is set to widen even further in the next couple of months as we complete the final tranche of our commitment to investing an additional ZAR 120 million to ensuring not only a living wage, but a just wage for all our employees. Another key focus area for us is continuing to implement our Inclusive Justice Initiative, or IJI, as we call it. Our Inclusive Justice Initiative embraces the principles of diversity and inclusivity. In other words, leaving no one behind. Our W Pride campaign in June was an example of this, where we took a stand in support of a world where everyone is accepted, protected, and respected. We will continue to play an active role in addressing critical social matters and issues of marginalization and social justice, in line with our vision of being one of the world's most responsible retailers.
I'm also very proud that our Good Business Journey is being recognized externally, too. At the recent 2023 Kantar Brand Awards, we were recognized as the number one brand in sustainability. Not only that, we were also recognized as one of the top 10 most valuable brands in South Africa and the top retail brand overall. The integrity of our brand is paramount to our success, and its value is largely determined by our customers' trust and loyalty. We don't take this privilege lightly, and I'd like to take this opportunity to acknowledge and thank our customers for their loyalty and support, and also to thank all of our suppliers, our partners, and of course, our remarkable people who do what they do every day in making our difference exceptional. And with that, let me hand over to Zaid to take you through the financials.
Thank you, Roy. Welcome and good day to everybody. I'm delighted to share our financial results with you. We've had a really great performance for the 2023 financial year, and I'm here to give you some insights into the numbers. It's been an eventful but very successful year for us, in which we've performed very well considering the tough trading conditions. You heard Roy say that the sale of David Jones was significant for us. We completed the sale at the end of March and have reported it as a discontinued operation in our group results. It's good to note here that the David Jones result is for a 9-month period this year, versus a full 12 months last year. It's been a long journey, and we are pleased to have concluded the transaction.
Roy has told you about the impact of the sale and the value that we have extracted. I will give you some detail on the accounting for the sale a little later. First, I will tell you about our group highlights very briefly, and then I want to spend more time telling you about specific elements on our results, especially our continuing operations. We all know what the economy has been like. Our customers are having a really tough time. The cost of living is high, and load shedding in South Africa adds further challenges to this. Despite this environment, we are reporting really strong numbers. The strength of the result is clear in the metrics. I do want to call out two highlights in particular.
We have positive leverage all through our income statement, from growth in sales of 6.9% for the total group to AEBIT up 21.3% and ADHEPS up 35.6%. In continuing operations, we show a similar picture with sales up 11% and adjusted diluted HEPS growth of almost 19%. The dividend for the year is up 36.4% on a 70% payout ratio. Both ADHEPS and dividend have had an accretive benefit from our share buyback program we undertook during the year. Our numbers are looking good. We managed to achieve this thanks to a deliberate focus on driving profitable sales, in which we improved GP margins across all our businesses, together with very good cost management, despite the load shedding and inflationary pressures that we had to contend with.
Continuing with the financial overview, I'm pleased to say that the group ended the year with a healthy and robust balance sheet, which is very comforting. This was strengthened by the sale of David Jones, and combined with our strong operating results, improved our balance sheet metrics. This means that we're not only able, but also have the means to move into a phase where we can optimize and invest for future growth. But more about this a little later. Our total share buybacks for the year was ZAR 2.9 billion, after spending an additional ZAR 1.4 billion in the second half. As a result, we've ended the year in a net borrowing position of ZAR 2.5 billion.
In Australia, we are in a net cash position of AUD 149 million, which is likely to reduce as we bring funds back to South Africa. If you've been with us on the David Jones journey over the last few years, you'll know that one of our pain points was the long-tenured leases, and I'm happy to report that these are no longer on our balance sheet, and lease liabilities for the group are substantially down from ZAR 27 billion last year to ZAR 11 billion this year. Net debt to EBITDA, including lease liabilities, is at 0.9 times versus 1.6 times last year, and our return on capital employed has jumped almost 7 percentage points to 23.6%. This is well in excess, in fact, almost 10 percentage points above our group weighted average cost of capital.
We have a very healthy cash conversion ratio as well of 93%, which further demonstrates our inherent ability to generate cash. Later in this presentation, we will cover how this fits into our overall capital allocation framework. Now to the main elements of our performance, starting off with sales. In continuing operations, we increased sales by 10.8% and by 9.3% in comparable stores, and we achieved this despite a drop in discretionary spend from heavily constrained customers. While second half sales were under pressure in the apparel businesses, food sales accelerated. Our online sales grew by 9.3% and contributed 8.3% - the total group sales, which is on par with last year. In Fashion, Beauty and Home , we delivered strong full-year sales growth of 8.9%.
The growth that we've delivered in FBH is ahead of the market, while at the same time we have driven initiatives to rationalize SKUs, reduced unproductive space and promotional activity. I'm delighted to report that in our food business, our sales growth momentum accelerated throughout the year. In H2, in the second half, in particular, sales were up by 9.4%, and this was driven mainly by increased footfall, improved product availability, and further enhancements to our customer value proposition. During this period, we also kept our price movement at 8.3%, and that's well below inflation of 9.9%, and despite the elevated cost of load shedding. In Australia, following a strong start to the year for the Country Road Group, we saw a steep decrease in trading momentum to just below 1% in the second half.
Despite the high cost of living pressures on retail discretionary spend in the country, the team were able to end the year with a very good growth of 12%. Let's have a look now at the adjusted EBIT firstly for the year, and thereafter for the second half of the year. Our group EBIT was ZAR 8.5 billion. This is up by 21% on last year and 13.5% up for continuing operations. This is largely driven by strong growth in the apparel businesses, particularly in the first half. We saw positive growth in all businesses, except for our financial services business, WFS. While WFS grew the book and interest income, the business was negatively impacted by the higher impairments we have seen consistently throughout the lending industry.
You heard Roy talk about load shedding, which in South Africa, has significantly impacted our food and FBH businesses. Adjusting for the cost of load shedding, our AEBIT growth is 24.6% on last year and 17.4% for continuing operations. Now, turning specifically to the second half, the group EBIT for continuing operations was up 3.3% and up 7.8%, including adjustments for load shedding costs. This is a very resilient performance under very challenging conditions. The South African FBH and food businesses performed really well despite load shedding and tough trading conditions. The CRG result diluted the overall growth in the second half. I mentioned earlier, the challenging conditions in Australia, and these were made worse by the high base that CRG was coming off, which was up 20% in FY 2022.
Now, let's turn to the segmental results for each business. It's important to note that the slides that I will talk to call out the key highlights only, and you'll find detailed income statements in the appendix to the presentation pack, which has a full year and an H2 income statement. Let me take you through our FBH business first. Our teams continue to make significant progress in improving the underlying health of this business. You will see in the results how these strategies are gaining traction, and there are still many self-help opportunities that we are going after. I've already shown you the sales results, but I want to add a bit of color to this. Womenswear , menswear, beauty performed particularly well for us, especially in our must-win categories.
Online sales contributed 4.3% of sales in South Africa, and in the rest of Africa, our stores had an outstanding year, which were up 25% in constant currency. Our price movement was 11.6% and was positively impacted by our focus on full price sales. At the same time, net trading space was largely unchanged, with a reduction in unproductive space offset by new WEdit store openings. Our GP margin for the year was 48.5%, which is a fantastic result. That's up by 90 basis points and showed continued improvement into the second half. We managed our costs well, which grew by 6.8% for the year and 3.7% in the second half, while store costs were contained to 4.2%.
And because we kept cost growth below sales growth, we had this positive leverage to EBIT, which was up 21.3% with an EBIT margin of 13.2%. And adjusting for load shedding, the EBIT margin is 13.6%, which leaves us well on our way to the medium-term guidance that we've provided. Our return on capital employed showed a remarkable improvement of 25.6%. This is 3.4 percentage points up on last year. A really, really, truly good result. Let's now talk about our food business. In this part of the business, price movement was 8.3%, and this is well below food inflation of 9.9%. We have really understood that our customers are feeling real inflationary pressures, and we deliberately absorbed certain price increases and load shedding costs.
Our online business increased sales by 28.5%. This was supported by further rollout of our Woolies Dash, our on-demand offering, which now covers over 90% of our customer base. We continue to invest to make this a more profitable channel. The full GP margin grew even further to 24.8 in the second half, with full-year margin up 30 basis points. Supply chain efficiencies and targeted promotions helped to offset some load shedding and inflationary costs. Expenses were up by 12.4%, which was driven largely by increased diesel costs caused by load shedding, investment in growth initiatives, and to a smaller degree, by growth in trading space of 3.6%.
EBIT was up 2.9% - nearly ZAR 3 billion, and this returned an EBIT margin of 6.9% for the year, which is 7.3% adjusting for load shedding. This is a very good result, which is ahead of our medium-term guidance, and our return on capital employed remains best in class at 56.4%. The Country Road Group is an important and significant part of the group. It's a material contributor to good results and also serves as a currency hedge against the weakening rand. Despite the second half being tough, Country Road traded in line with the market and ended the year with EBIT up 25.6%. The Country Road brand remains a standout performer and enjoys deep loyalty from its customer base.
The online channel in Country Road continues to significantly contribute to sales at 27.1%, which is only slightly below last year, and this is mainly due to customers returning to stores after the pandemic. Strong full price sales and lower promotional activity meant an increase in GP margin of 310 basis points to 62.6%, while expenses went up by 15.9% from a lockdown-impacted base. The EBIT increased by 25.6% - AUD 151 million, returning an EBIT margin of 12.4%, which is pleasingly ahead of our medium-term guidance. CRG's return on capital employed continues to improve at 16.3%, which is up 2.6 percentage points from last year and more than twice the Australian weighted average cost of capital.
Woolworths Financial Services delivered a strong book growth of 14.5%. This was driven by new accounts and credit card advances, and despite this growth, the credit contribution to the WSA sales declined over the period. Book growth, together with higher yields on repo rate increases, enabled net interest income to increase by 22.2%. Rising interest rates have also put consumers under pressure and under further strain, and this is seen in higher default rates, particularly in the last quarter of the year. The result is a higher impairment rate to 7.3%, which, although on the rise, remains industry-leading. Return on equity was 10.3% due to a combination of higher impairments and capital required due to the book growth. You heard Roy talk about the sale of David Jones and how we've extracted value.
I will talk about the results for the nine-month period and the profit on the disposal and the related costs. Earlier this year, at our interim results presentation, we talked about our success in turning around the business. This is evident in the results for the nine-month period and the contribution to the group results of AUD 141 million. The proceeds on disposal were ZAR 1.13 billion. This includes the initial consideration received during the financial year and the final consideration receivable after the financial year. We have recognized a profit on sale of ZAR 411 million, net of cost to sell and accounting value of David Jones. In addition, there were other transaction and separation costs, which are about ZAR 115 million to date, and this has been accounted for as an abnormal adjustment to earnings.
Let's now have a look at our balance sheet, cash flow, and use of our capital. We spent ZAR 1 billion of CapEx more in FY 2023 than we did in the prior year, and you will notice that these numbers exclude what we spent in David Jones. We plan to spend an additional ZAR 700 million in FY 2024 and a total of ZAR 10 billion over the next three years as we move into a new phase of optimizing our business and investing for growth. We'll be spending the money on growth, capacity enhancement, and customer experience improvement initiatives. And this includes new stores and formats, category expansion, data, digital and online, supply chain capacity, and investing in our loyalty platform. The transformation initiatives in the FBH value chain will firmly establish a good platform for future growth in that business.
Taking a look at our balance sheet, these are great numbers, really great numbers. We have a very robust balance sheet, which has been further strengthened, together with key metrics, by the sale of David Jones. Our net borrowings are ZAR 2.5 billion, net of AUD 149 million of cash in Australia, part of which, as I said earlier, will be repatriated to South Africa in FY 2024.... This is a good time to remind you as well, that more than 80% of our drawn debt in South Africa is linked to sustainability criteria, and we are confident that we will achieve our targets. I mentioned this earlier, but here you'll see that we've reduced lease liabilities from ZAR 27 billion to ZAR 11 billion, while net debt to EBITDA is at 0.9 times, which is well within our targets.
Looking at our cash generation waterfall, we generated ZAR 11.4 billion of cash from operations, net of working capital. I'm very proud of this result, which proves the extent to which we are a cash-generative business with a very healthy cash conversion ratio of 93%. We spent ZAR 2.5 billion on CapEx, ZAR 2.9 billion on dividends, and ZAR 2.9 billion on share buybacks, which resulted in net gearing increasing by ZAR 3.2 billion over the year. Over the last two years, we intensified our capital allocation within the group. If you followed us for a while, we've previously shared our aspirations with you and want to reinforce our commitment to it. Regarding returning value to our shareholders, we declared a final dividend of ZAR 1.545 per share.
This takes our total dividend for the year to ZAR 3.13 per share, which equates to a 36% increase on the previous year. This dividend is based on a 70% payout ratio and is from the Woolworths and Country Road Group earnings. During the current year, the ZAR 2.9 billion repurchase of shares was at an average price of ZAR 62.77 per share, and this brings the total buyback over the past two years to 6.6% of issued shares at an average price of ZAR 60.40. These buybacks have an enduring benefit well into the future. I want to end with a snapshot of trading over the last 8 weeks of the new financial year. FBH and Food are broadly in line with the second half growth rate, but at a lower price movement.
We expect the price movement in H1 for Food and FBH to be 6.5% and 8.1%, respectively. Our estimation of the impact of the Western Cape taxi strike on our trade during the period is circa 1% in both Food and in FBH. The Country Road Group is down 3.3% on last year in its first 8 weeks, and this is a reflection of the entire retail sector, which is impacted by low consumer sentiment and discretionary spend. In closing, we have had a really fantastic year, and I want to recap a few notable achievements. Strong, strong operational and financial performance across the group. The sale of David Jones, which transforms the group and the balance sheet.
A strong and robust balance sheet that sets us up for investment and growth into the future, combined with strong shareholder returns through share buybacks and a healthy dividend payment. On that positive note, back to you, Roy.
Thank you, Zaid. Before we get into the outlook, and the opportunities we see ahead of us, we thought it would be worthwhile to take a minute to look back and reflect on the progress we've made over the past three years to essentially sort of fix, strengthen, and reposition the group. When I joined Woolworths, at the beginning of 2020, at the onset of COVID, we undertook a comprehensive, candid, and honest assessment of the whole group across our various businesses, strategically, financially, and operationally, literally end-to-end, Foods, FBH, CRG, and DJs. An important aspect of this, of course, was specific to DJs, evaluating all options to determine how we could maximize value from that point onwards.
Coming out of this, group-wide evaluation, we put firm plans in place to fix the things that were broken, to build on our strengths and competitive advantages, and to reposition our group. These plans ranged from restructuring our balance sheet and the way we allocate capital to resetting our respective business strategies. We made a number of commitments to you in that process, including providing you with milestones and targets against which you could track our progress and hold us accountable to the promises we'd made. So let's take a look at how we've delivered against those commitments. Firstly, we said we would transform our balance sheet, and that's what we've done. We've reduced our debt by ZAR 9 billion since 2020, and now we have no borrowings in Australia and a WSA net debt to EBITDA ratio well within our target.
We said we'd reevaluate our approach and intensify our focus on capital allocation, and we've done that. And as a result, we are returning more cash to our shareholders through both dividends and share buybacks. In fact, our dividend is now over ZAR 3 a share, and we've undertaken the largest share buyback in our group's history. We said we'd evaluate all our options with respect to David Jones to unlock value for WHL and for our shareholders, while simultaneously improving DJ's profitability, and of course, without investing another rand from South Africa. And you've seen we've done that, and more... We also said we'd improve the underlying health of each of our businesses by setting clear strategies and defining a clear pathway to achieving our medium-term margin targets, and we've done that, too.
Our compounded earnings growth over the past three years, our strong cash generation, and the significant improvement in ROCE, are all results of the commitments we've delivered upon in respect of each and every one of our businesses. If I turn to FBH, we identified that fixing this business would be the single biggest opportunity to reset value for our group, and through a relentless focus on executing our refreshed strategies, we've doubled the profit of this business over the past three years. We did that by prioritizing three metrics: the proportion of product that goes out the door at full price, the percentage marked down, and how we are trading on a per-square-meter basis. Through our Edit to Amplify strategy, we've increased our full price sales from just over 70% - well over 80%.
We have reduced markdown by over 9 percentage points to 13%, and we're now deploying technology and data analytics to reduce this even further. We have also now removed almost 70,000 square meters, or over 15% of unproductive space from our trading footprint, lifting our trading densities by over 35% since 2020. In the case of food, we made the commitment to strengthen what we call our Holy Grail, which is the sweet spot that balances giving our customers the best overall proposition in the market, and our shareholders the highest return on capital in our sector. Notwithstanding our increasingly competitive backdrop and the challenges of load shedding, our margins and returns on capital remain industry-leading. From a customer perspective, we've improved our on-shelf availability by 2 percentage points over the last three years.
This, and the growth we're seeing both in new customers and average basket spend, is real testimony to the fact that we're still raising the bar when it comes to our overall proposition, whether it be in terms of our unassailable product quality, innovation, convenience, service, experience, or our sustainability credentials. In CRG, our objective was to literally unshackle it from David Jones, which we've successfully done. Over the past three years, we've also focused on exiting unproductive space, which has driven a 50% uplift in trading densities. We've expanded GP margin by four percentage points, and we've delivered a three-year CAGR in AEBIT of 36%. So we've made some great progress against both our operational and financial objectives, but what I'm really proud of is that this hasn't only been about profit.
We have never, nor will we ever, lose sight of our commitment to sustainability, and through our Good Business Journey, we've maintained our focus on our social and environmental goals and responsibilities, and the role we play in creating a meaningful impact on the world around us. This is integral to our identity. It's ingrained in our DNA and woven into every fiber of who we are and what we do every single day, and we're looking forward to sharing more of this with you in our next annual GBJ Investor Day. Now, whilst I'm very pleased by the progress we've made over the past three years, I am, in fact, more excited about what lies ahead.
By structurally repositioning our group, we are now in a position where we can shift to optimizing, investing, and growing our businesses as we continue to build on and leverage the foundational strengths we have now established. So let's turn to what this means for each of our divisions, starting again with FBH. Now, even though there are really clear indications of a turnaround that is well underway in this business, continuing to improve fashion's underlying performance still remains one of the biggest opportunities for us. As I've often said, our Edit to Amplify strategy was not about chasing market share in the aggregate. However, we have, in fact, and pleasingly, gained market share over the past year, and it's been driven by our performances in what we have defined as our must-win categories: our wardrobe essentials, our work leisure, lingerie, athleisure, denim, and kids and baby.
Our strategy to supplement our must-win categories with select third-party brands is working. Take denim, for example, where we have introduced Levi's. This has really given authority to the category, boosting our own label business, Re. As a result, where sales are now up 20% in men's and up 30% in women's. The market share gains we're seeing in our must-win categories are, in fact, being driven in part by our data analytics and insights, which are enabling us to understand and respond to our customers' wants and needs in a far more sophisticated and granular way. These insights have been instrumental, for example, in how we are repositioning our womenswear business, where full price sales have grown by well over 20% over the past year alone.
Now that our teams are more confident, our processes are beginning to work well, and our product is increasingly resonating with our customers, we are really doubling down on our must-win categories.... We're also now slowly returning to net positive space growth, driven by the rollout of our new W Edit format stores, which are performing ahead of expectations. These highly curated and smaller format stores enable us to expand our footprint into the convenience space, as well as new markets, allowing us to become much more accessible to more customers, but in a much more profitable way, too. As many of you already know, whilst our total trading space is not dissimilar to that of our peers, we do have a fraction of the number of stores, as we typically always traded out of fewer but much larger boxes.
So this represents a very exciting white space opportunity for us, and we will be accelerating this in the current year. For those of you who haven't had the chance to see these stores in person, here's a short video of what you could expect to find. As I shared with you in our interim results, beauty is a really standout performer, with sales now of over ZAR 1 billion, having grown by almost 30% over the past year alone. We see further runway for this business as we plan to establish ourselves as the beauty shopping destination in the market by doubling this business over the medium term. We see a lot of scope in our home business, too, not just in driving the cross-shop between home and food in particular, but also in driving and growing our online channel.
The teams here are working on a clear and discrete home strategy, which, as we did in fashion, will focus on key must-win categories. So we see a number of avenues of growth across each of F, B, and H. But to fully realize our growth ambitions, we still have work to do to optimize a number of our processes, particularly when it comes to what we call the back end of the business. It is one thing to get the product right, but we need to ensure that it's consistently available at the right place and at the right time, right across our network of stores. And to this end, we are investing over ZAR 1 billion into our value chain over the next three years. It's an area we have not invested in materially since 2010.
As just one example, virtually 100% of the product buy is currently allocated upfront and shipped to our stores, and depending on sell-through rates, this could result in an overhang of product in some stores and an absolute lack of availability in others. Our value chain transformation initiative will drive multiple capability shifts across our systems, processes, and logistics, including the delivery of enhanced planning capability and a centralized inventory model. Effectively, this will mean shifting us from what we call a push model to a far more efficient dynamic pull model, where a proportion of product will be held centrally and then disseminated to stores as and when each store requires it, essentially responding in real time to customer demand. This, along with a more agile supply chain and increased local sourcing, will allow us to provide a more customer-centric offer across all channels and geographies.
Importantly, it will also allow us to improve our availability and stock turns, which are a key focus area for this business going forward. I believe that we have fundamentally shifted the trajectory of FBH, but we still have some way to go. As our strategic initiatives evolve, Manie and the team are now shifting focus to optimizing our operations and our foundation, from which we can drive further sustainable and profitable market share gains across each of fashion, beauty, and home. Turning now to food. As the premium food retailer in South Africa, we often get asked whether our target market is, in fact, shrinking, and what that might mean for future growth. I'd like to address this misperception. We have several million customers on our W Rewards program, and this number continues to grow.
In fact, over the past year alone, we have grown our loyalty base by over 500,000 customers. These are entirely new customers now shopping our brand. Continuing to attract new customers is clearly an important growth strategy for the foods team, but arguably, an even bigger driver of top-line growth is, in fact, growing the share of wallet of our existing customers. Now, whilst our VIP customers spend a large proportion of their total monthly grocery bill with us, they only make up about a tenth of our customer base. In the case of the other 90% of our known customers, Woolies makes up a much smaller proportion of their grocery bill, and in this case, every 1% of their wallet that they shift to us equates to about ZAR 1.5 billion in additional sales.
This is a clear opportunity for us that we're going after, and it has, it has really underpinned the 8% growth we've seen in transactions this past year alone. These are customers who love us. They shop us, and now they're shopping us even more as we, as we become increasingly more accessible to them. There are a number of levers that we have to becoming more accessible. The first is about driving on-shelf availability through a more elevated, sophisticated approach to what we call category management, effectively leveraging our customer data and advanced analytics to drive hyper-localization. The second is about amplifying our differentiated value proposition by growing the gap between us and our competition on the key differentiators that make Woolies Woolies: our quality, innovation, convenience, service and experience, sustainability, all at a fair price.
Then it's about increasing our marketplace presence, both in terms of our share of voice, what we communicate with our customers, and how we go about doing that, and then also our marketplace presence, whether through brick and mortar or online. As you will see from the schedule in the back of your pack, we're looking to add about 3% new space this year as well as next by opening new stores and expanding existing ones, while simultaneously growing our online business, too. Over the past year, we've prioritized rolling out our on-demand proposition, Woolies Dash, which is now available out of 100 stores and services more than 90% of our customer base.
In this next year, we're going to focus on really improving our customer experience of Dash by increasing slot capacity, particularly in the urban nodes, and improving stock availability, which will be aided by the opening of additional dark stores.
With all this talk of Stage 8 , you don't have to give up on freshness. When you need it to last longer, you can count on Woolies Dash. Fresh stays fresh, frozen stays frozen, because it is kept Woolies cold from our store to your door. After all, faster doesn't mean fresher. With Woolies Dash, you get it same day, and it'll last longer. Now, who wants that? Everyone.
As you can see, for us, it's about consistent commitment to quality, not just about quick and dirty convenience. Another important lever to increasing our share of wallet is our loyalty program itself. To be candid, we could do a lot more to drive and incentivize loyalty, and so we've been building a new platform that will allow us to better manage and leverage our customer data so that all of our offers and promotions are more personalized and relevant. We're taking this a step further by integrating not just our actual transactional data, but all of our rich online engagement data to create a holistic profile of our customer from what they do, how they browse, what they buy, so that we can better service their needs.
Now, a lot of what I've spoken about is around our core food business and the opportunities we see to optimize and grow our core, and this is where the majority of growth in our foods business is going to come from. But we are also now giving more attention, in fact, providing more oxygen, to some of the newer concepts, formats, and solutions that Zaid and Shannon and the rest of our foods leadership team have been working on. We're expanding our high ground in wine to include liquor by accelerating the opening of W Cellar formats and extending our online liquor offering, where we already have the largest wine club in the country. We're also building out our pet business, where we currently hold only a very small share of the ZAR 7.5 billion market, a market that's growing in the double digits.
We also know that a lot of our Woolies customers consider their pets to be an integral part of their family. So this is an obvious opportunity to assert our Woolies credentials in the growing pet space. We're also going after a number of growth opportunities that we see in what we call food services, channels and formats that will leverage off our existing backend capability to provide more immediate consumption opportunities to both new and existing customers. This is something we're pretty excited about, and we'll share a lot more of this with you in due course. As is the case for FBH, in order to realize these growth ambitions, we are also aware that we need to invest in and strengthen our critical enablers, from in-store service to backend technology.
A big part of this is, in fact, the expansion of our Midrand DC, where we'll be investing around ZAR 1.5 billion over the next three years, a sizable investment for us, but vital to ensuring that we have a future-fit business from which to drive sustainable long-term growth. So there's a lot underway to growing our food revenues, whether in our core business or our new avenues of growth, and we'll do that while strengthening our Holy Grail, providing customers with the best proposition in the market and providing our shareholders with the highest return on capital in the sector, and doing all of this at scale. That's the DNA of this business, and that's what makes money for our shareholders.
Now, turning to Australia, as I've said, the sale of David Jones has been transformational for the WHL group, and that includes for CRG, which is now in a position to pursue its own growth ambitions. Key to this is unlocking the full potential of our existing brands, and that means accelerating the growth of Country Road, which continues to perform exceptionally well, scaling Trenery, stabilizing and growing the Witchery brand, consolidating Mimco, and relaunching and growing our Politix business. We're investing in refurbishing our existing stores to upgrade the in-store proposition, but at the same time, we're also exploring new channels and markets to attract new customers. Recently, for example, we reentered Myer, Australia's largest department store, and have launched a wholesale model, which broadens our product reach to more regional towns in the country.
Looking beyond Australia, we're also exploring the opportunities we see to take our Country Road brand into new markets, which we'll do in a low-risk, capital-light way. Our Country Road Group brands also play an important part in our South African business by complementing our FBH offering with a premium proposition, where there is also a very strong cross-shop with our food customer. This year alone, our CRG business in South Africa has grown sales by over 20%, and that's on the back of almost 30% growth in the prior year. We've identified further room to improve CRG's gross profit margins by driving greater economies of scale in sourcing and distribution.
We're making further upgrades to our digital platform and our loyalty programs, and we're investing in a future-fit IT operating model to build a common platform of capabilities across our brands, solidifying a foundation that we can scale. Combining this with CRG's strong portfolio of brands and leading omni-channel capabilities, this really sets up Raju and his team to deliver on the full potential of this business. If we bring all of this together, what does it mean for our group? While we are mindful of the current macro context and a number of the challenges that lie ahead, we have a strong balance sheet and strong foundations as we enter into a new phase of our investment thesis, investing in growth and growth-enabling initiatives to unlock even further sustainable value across our group.
Now, I've always been open and transparent with you with regards to what you can expect from us, and that's never going to change. We are entering into a period of heavier CapEx and OpEx investment to support our future growth ambitions. As we're investing in our asset base, particularly in our foods business, it will mean a short-term drag on returns, and as we're investing behind new revenue streams across the group, it will mean incremental OpEx. But we'll manage this in a very responsible and disciplined way so that we still deliver on our medium-term targets that we've committed to. Given this phase of investment, we're not, at this stage, going to lift our guidance.
Let me assure you, that time will come, but for the moment, we're keeping it unchanged, and to do that, we're going to intensify our focus on costs so as to create the wherewithal, the headroom, to make these investments without any compromise to the financial commitments we've made to you. We see this as really propelling us into the next phase of our investment thesis, one with a more prominent focus on growth, and more specifically, profitable growth. Yes, it requires initial investment, but I am confident that we'll see the operational and financial benefits of these investments really coming to the fore from the next financial year. We'll continue to provide you with the milestones and the metrics you need to track our performance along the way and to hold us accountable to our commitments.
In closing, I think we're in a relatively advantageous position, having already done a lot of the heavy lifting, particularly in terms of our balance sheet and the foundational profitability of our business. What we said we would do, we have done. We have structurally repositioned our group. We can now use these levers, this firepower, to our advantage to further optimize and grow our business, to generate even greater levels of economic profit. We are permanently step-changing the value creation profile of this group. We have an exceptional team of people whose collective passion, determination, and commitment are the cornerstone of our past and future success.
I personally am truly inspired by them, and I'm excited by the opportunities that lie ahead for all of us, as together, we build a future-fit business, which will see us emerge as clear winners, not just in the market, but in the hearts and minds of all of our stakeholders. With that, we'll now open for Q&A.
Good morning, everyone. Thank you again for joining us at our FY 2023 results presentation. We're gonna go straight into Q&A. Roy, our first question: Your peers are all reporting GP margin declines, whereas you're lifting GP margin. What gives you the comfort that you're not pricing yourself out of the market?
Thanks. Thank you for the question. Well, our GP margin gains have not been driven by price. In fact, we've actually absorbed some of the input inflation we're experiencing, and you would see that from the fact that our internal inflation is below the sector and well below headline inflation. So we've actually been investing in price. There are two main drivers behind our GP margin gains. Firstly, we have a number of initiatives underway to improve our input costs, whether it's consolidating supply in FBH, which is driving better economies of scale, or working even closer, I guess, with our exclusive suppliers in our foods business to really look at the makeup of input costs. And then secondly, we're selling a lot more at full price.
So we've reduced our promotional activity across all of our businesses, really going for quality over quantity, and we've reduced our markdowns, and that's translating into the better GP margins you're seeing.
... Thanks, Roy. Next question: this time last year, you lifted your FBH margin guidance when it seemed clear you were going to beat your target. It seems you're on track to do that again, so what is different this time around? Why are you not lifting your guidance in FBH?
Yes. Well, you know, we obviously continue to review our margins and our margin targets. And as I said in the presentation, it's very likely that we will lift this in due course. I've always said that, you know, if 14% is really where we get to, that would be a little bit disappointing for us. But I think for now, we're very comfortable with it, with where it's at, particularly in the light of, I guess, the current macro climate and the context of some of the investments we're going to be making and are making into the FBH business.
So for a minute, you know, we're going to sort of pause and get some score on the board first regarding these investments, and then, I think we'll sort of talk a little bit more about where to with the margin targets.
Thanks, Roy. Our next question is probably one for Zaid. I see you've grown your WFS book by 14.5% over the period. How much of your FBH sales performance was driven by increased credit?
Yes. Thanks, Jeanine. Yes, indeed, our WFS book did grow by 15%. And of course, as you know, the WFS book is a combination of in-store card , credit card, and personal loans. The majority of that growth actually came from the credit card business, not from the in-store card . In fact, our credit card sales in FBH only grew by between 5% and 6%. So our top line growth was driven primarily by cash, and cash sales actually grew by 10%.
Having said that, we do think that we could do more to actually leverage our WFS business, to get more sales and to drive more sales from our customers, but to do that in a responsible way, and to do it at the right point in the cycle.
Thanks, Zaid. Our next question, Roy, is around the disposal of DJ's. You've sold DJ's for just over ZAR 1 billion, which seems very low in light of the profit it generated, and below what I recall being the carrying value of the business on your balance sheet. Can you elaborate?
Yes. I'm not sure exactly how you sort of arrived at that conclusion, but yes. Let me start first maybe with the question around the carrying value. You'd recall from our results last year that our carrying value, when we communicated it out to you, was in the region of just north of AUD 300 million. Since then, we've obviously generated profit from the David Jones business, which would have increased the NAV. We have also, however, subsequently extracted a fair amount of cash out of that business, which in turn would lower the NAV. And we've removed the Melbourne building into a separate entity, which also lowers the NAV.
Net of all of this, the NAV of David Jones, let's call it OpCo, at the time of sale, was reduced to around ZAR 700 million. We sold the OpCo for ZAR 1.1 billion, which is how we get to a profit in excess of the NAV of around ZAR 400 million. So we very clearly sold the building for more than its carrying value. The second part of your question, you know, the value, absolutely, in terms of the value extracted. We've extracted far more than the ZAR 1.1 billion. And, I think the way to think about it is that we have, over a period of time now, been reducing the DJ's asset base through a number of deliberate initiatives.
You'd recall, we sold two buildings, Elizabeth Street and our Bourke Street menswear building. We've also traded the business pretty hard for cash. Really sort of, you know, outperforming, and, and, yeah, the market in Australia, particularly in the first half. You know, that resulted in the highest levels of profits we've achieved in David Jones since, since acquisition. We've also extracted all of this cash. We then removed the Bourke Street womenswear building, as I mentioned, into a separate entity. So that, effectively left in OpCo, the brand, David Jones, and the level of inventory.
Now, yes, I mean, there's some value to that, but sitting on the other side of that brand and inventory was a ZAR 10 billion cost base, which was primarily fixed, and a ZAR 18 billion of debt of liability, mainly in the very long leases. So net-net, there was very little value ascribed to the operating entity. I guess, I mean, this was never really going to be an earnings transaction. It was always gonna be a transaction that goes to the balance sheet. You know, the... And certainly, I mean, the majority of the value at the time of sale lay in cash, you know, as a result of those asset disposals, and of course, the Melbourne building, which we've retained, and we are earning a pretty decent rental yield on that.
So, you know, in my book, all of that rolls up to around the ZAR 7.7 billion of value we've unlocked since 2020. Aside from, of course, what this all means for our group's balance sheet, and the fact that we've been able to use these proceeds to buy back our own shares. Yeah, I think that's sort of pretty much it, and I hope that really clarifies it.
Roy, thank you. That was quite a lot to get through. Zaid, a question for you: How should we think about the outlook for GP margins in this first half for both FBH and CRG, given the high levels of inventory at year-end?
Yes. So yes, inventory has been high at the end of the financial year, but I think first we just need to really understand why the inventory has gone up, and I alluded to this in the presentation. So one of the big drivers for the inventory numbers being up is, of course, inflation. It’s a big part of this. And if you adjust for inflation, you will see that the unit growth, especially in the FBH business, is actually down on last year. Marginally down, but down. So that’s the first part to understand. The second thing is that mix also plays a big part in this.
In our FBH business, in particular, we over-indexed in terms of stock with regard to menswear, womenswear, and footwear, and that sort of brought the inflation up. Also to keep in mind that there were some timing differences between when we had brought stock in, particularly the summer stock that kind of came in, you know, came into our DCs and the stores. But also to keep in mind that even though that was purely a timing thing, from a working capital perspective, while the stock increased, so did the accounts payable, and therefore, from a working capital perspective, it is largely neutral. And in the case of Country Road, their stock is also up, but that's largely driven by...
You know, we're investing in new channels, in going into Myer, into wholesale, and that's added inventory to inventory levels to the year-end position. I'm not unduly concerned about the health or the shape of our inventory position at this point in time. We're managing our intake very well, and if needs be, we'll pull back on the buy. So I don't really see any foresee any risk in our GP margins. It's also important to remember that a number of internal initiatives, which Roy has spoken to, in respect of how we're improving ways of working, how we're improving economies of scale, all of which will support our GP margin in this current financial year.
Thanks, Zaid. Roy, we have a question on market share and FBH. You've always said you weren't going after market share in FBH, but now you're commenting for the first time on taking share. Are you now going after market share as a, as a strategy?
Yes. Thank you. No, I mean, I mean, you know, I certainly don't want us to be confused. I mean, you know, market share is not our primary focus, in the Fashion, Beauty, and Home business. Our primary focus is still all about the financial health of this business. But I do think we've reached the point where, having improved the real foundations of this business, we can now start thinking a little bit more about market share. But when we talk about market share here, it's really around market share in our focused categories. We've called them out, previously, the six must-win categories.
They make up for about 80%-90% of what we do in our fashion space in particular, and absolutely growing market share within these categories is important, but market share in the aggregate, not an overarching sort of focus for us. Our priority here is share, but not share of revenue, but share of profits, and that's really the marching orders for Manie and his team relative to where we're taking the FBH business.
Thanks, Roy. A question on Foods: "Thanks, team. Your GP margin kicked in Food in second half FY 2023. Is the 24.8% you delivered the new normal? How does this relate to your drive to invest into price, which you expected to result in GP margin contraction a year ago?
Yes. No, thank you. I mean, we are continuing to invest in price. I mean, you'd recall, we communicated our plan to invest around ZAR 750 million into food pricing, and we're about two-thirds of the way through that process, so that will continue. And of course, we've also fully absorbed all load-shedding costs, but I think, you know, you can expect us to, at worst, maybe hold GP margins and potentially even lift them slightly, irrespective of load shedding. Because, I mean, I think at the end of the day, some of the work that we're doing, we're seeing paying off throughout the value chain to improve our costs.
Of course, you know, if Load Shedding dissipates, you know, that will probably, that will provide, for sure, a further opportunity to lift margins.
Thanks, Roy. Another question: "Thank you for the presentation. Please, could you indicate how load-shedding costs are allocated per SA segment? Is it based on energy intensity of the relevant operations or based on square meters occupied?" It's quite a short question. I'm happy to take it. It is based on energy intensity. Zaid, a question for you on the outlook for CRG profitability. Please, could you comment on the outlook for CRG profitability in the current year, given negative revenue growth year to date? Can you maintain margins in the current environment?
Yes, Jeanine, thanks for the question. Yes, the Australian retail market currently is in a lot of pressure at the moment. It's a tough market, and particularly the retail sector and the retail discretionary spend in particular. We can see that, we can see that quite clearly in the numbers, not just in our business, but across the entire industry. I think we're holding up pretty well in the context of that, but as you'd expect with declining sales, this will negatively impact profitability. It is something we're managing as proactively as possible, but it will mean some pressure on EBIT margin, particularly in this first half.
Having said that, we're not making any change to our medium-term guidance, so we're kind of keeping to that guidance in terms of where we expect the business to land. We're pretty comfortable in our targets over the medium term. So we've just got to ride out, I think, this period of challenge we have in this, I think, the first half, but I think it will return to normal pretty soon.
Thanks, Zaid. Roy, when you speak of ZAR 10 billion of CapEx over three years, what return metrics can investors expect on new additional investment?
... Yes, I mean, I think, you know, we've been fairly explicit in our capital allocation sort of framework, really calling out the approach we're taking regarding broad-based capital allocation. Within that, you know, we have very specific aspirations, you know, and particularly with regards to returns, you know, we, we've targeted ourselves to always deliver, you know, a return at least five percentage points above our weighted average cost of capital, so WACC plus five. And it's within that particular context that all of our CapEx investments are made, too, to what extent do they help us and support us achieving that particular aspiration?
Thanks, Roy. We have a couple of questions with regards to the Country Road concession sales and DJ's. So I'm gonna ask a couple of them together, and maybe we could just answer broadly, please. In the deal to sell DJ's, was there an agreement around the sale of Country Road product in DJ's stores? Is there any risk of a negative impact on Country Road sales on the sale of David Jones? Similarly, you reentered Myer. Could you elaborate on this and what it means for Country Road Group's concession arrangements with David Jones now that you've sold that business? I thought this was an exclusive arrangement.
Right. Right. Okay. Well, I mean, prior to us selling the David Jones business, we did renegotiate, you know, an arm's length arrangement between the Country Road Group brands and David Jones, and it was effectively targeted at terminating that exclusivity, that arrangement that we had with David Jones. We're still very much selling our products in David Jones. It's an important channel, but it's now done on an arm's length basis. But we're now in a position to consider, you know, other partners, in the market. And to be candid, I mean, we probably should never have taken the CRG brands out of Myer in the first place. We really never did recoup the revenues or profits we lost through that particular move.
We've gone back in, but I think the positive thing here is we've gone back in on very different terms, in terms of, you know, the commercials as well as locations and support for what it is we're doing, so a significantly improved set of arrangements, which we're very pleased about. But, you know, I guess it's also important to mention that the reentry into Myer is not just a Myer sort of strategy in a sense. It's part of a broader wholesale strategy, you know, where we see opportunities to get the Country Road Group brands more physically present in parts of the country where it's not present today, particularly in some of the more regional and outlying towns. So I guess, I mean, hopefully, I've answered that question.
Thanks, Roy. Congratulations on a great result and continued strength in the business. I noticed that the medium-term targets are now based on FY26. Does this mean that we don't expect to hit the targets in FY25 anymore? I'm happy to take that question.
Sure.
Our medium-term targets are always three-year rolling targets. Yes, our guidance hasn't changed, but because we communicated those targets last year in respect of FY25, we are still very confident in that guidance. So yes, you can expect us to reach or exceed those-
Sure.
in FY 2025. Roy, maybe a sort of final question. I think we've already done 20 minutes almost of Q&A. How should we... Excuse me. How should we think about the proceeds from the DJ sale and how those would be applied? What is your appetite for M&A? I think we did this a couple times.
Yeah, that's the sort of perennial sort of question, I guess, but, you know, as we've spoken a little bit about, even in the Q&A today, and certainly through our presentations, I mean, we've really intensified our focus on capital allocation. You know, it's something that we really want to characterize our group through, being great allocators of capital. And, through that process, we've defined a very clear set of principles, and an approach with very clear ambitions, which we've shared with you, and certainly, you should expect us to adhere to.
Part of that, obviously, is about returning capital to shareholders, and so share buybacks will remain a mechanism on the table for us, obviously, depending on market conditions at the time, and as we've said before, you know, a special dividend is not something that we would be terribly keen on doing. We've obviously reinstated our dividend policy and our dividend approach. We're distributing up to 70% now, you know, across, across the group, and that will continue.
But, if you've seen from Zaid's presentation and my presentation, we're talking about a fairly significant investment that we're gonna be making back into our businesses of around ZAR 10 billion over the next three years, across a range of different, you know, initiatives, fundamentally, all underpinning where we want to take the business from a growth perspective. So reinvesting in our own business is a big priority for us. And yeah, I think if you step back a little bit, there's obviously still some uncertainty around, from a macro context perspective, and, you know, I think in the current context, this is a healthy position for us to be in.
We're happy, you know, to be here, and certainly given, giving ourselves, maybe a little bit of time to evaluate our options. To the question around M&A, you know, obviously, we haven't ruled out M&A. We do look at various opportunities on an ongoing basis, and we do that consistent, again, with a very clear set of disciplined financial criteria. What does this, what would an acquisition need to deliver to us, and why? Operationally, we assess these opportunities, and clearly more, and importantly, too, from a strategic perspective, why would you want to do this? So we have been very clear, internally at least, and discussions with our board, around the criteria around which we'd go out and make an acquisition of any sorts.
But, it's also really important for me to say that, inorganic pathway to growth is not, required for us. I mean, we have a significant runway in, in all of our businesses for growth. We spoke a little bit about this in, in my presentation. We are fundamentally shifting from fixing what was broken, strengthening our business, and repositioning it to one where we are going to optimize that, but really double down on, on growth. And so, you know, we think that the organic pathway to growth is still the best pathway for us, but, yeah, clearly, you know, if opportunity, presents itself, we'll look at it closely and, and, and take advantage of it.
Thanks, Roy. Do you wanna do one more?
Sure.
It's a question on Checkers Fresh X. I'm not sure if we could conclude a results presentation without a question on Checkers Fresh X.
Yes, I'm surprised they're only coming now.
Morning, team. Thanks for the presentation. 3 questions from me. 1, what assumption on stage of Load Shedding is used to get to the ZAR 20-30 million per month for diesel costs? What percentage of WHL Food is the fresh food business? And 3, are you concerned about Shoprite's expansion into the premium retail market with Checkers Fresh X?
Yes. Well, well, thanks for those questions. I mean, obviously, when we think about the ZAR 20 million-ZAR 30 million, we're typically talking about consistent load shedding Stage 4 . You know, and obviously, it fluctuates depending on where you're at. Roughly, in terms of our overall mix of the food business, just north of 65, you know, 65% is fresh relative to long life, so that would give you a split there. And then, you know, this little nudgy question around the Fresh X, you know, sort of eating our lunch. I mean, who wouldn't want our lunch, you know, I guess? But at the end of the day, you know, when you are a market leader, you have a target on your back.
I mean, people are coming at you all the time, and, you know, whilst we clearly are... We observe, we understand, and we appreciate what they're doing, and, we commend them on their efforts. I mean, we do. But, really, our job is not about them, it's about us and what we can do to continually grow that gap. We do have a very unique foods business. I speak often about the Holy Grail, and I'm not going to recount that again, but it is a unique business. It is a unique proposition. It has, you know, very significant foundational capabilities, which are not that easy to replicate, frankly. And net-net, you know, the back end of our foods business is a real differentiator for us. We're...
I guess when you look at it, I mean, the way I'd sort of define it, is we're not just about features, we're about the foundations, too. And it's our job, and it's the job of Zaid, and Shannon, and the team to keep making sure that gap continues to grow between us and any competitor out there. Thanks for the question.
Roy, thank you. I think that brings our Q&A section to close. Any concluding remarks?
No, no, clearly, I mean, there's always a couple of other smaller questions or other questions that might come in or come through post this. Please send them through to us. We look forward to being able to answer those, you know, very quickly. And, obviously, you know, over the next couple of days, we have a number of meetings lined up with all of you, and look forward to engaging with you in a lot more detail around where we've gotten to. Really pleased, overall, that the group is where it is today, and, you know, really thank you, for everything. Thank you.