Woolworths shares have dropped as much as 4.9% after the release of Thursday’s trading update – the steepest trading fall since April 9. Woolworths has issued the trading update in anticipation of its Annual General Meeting to be held on 26 November 2014 where the growing boycott campaign is expected to be a major discussion point. Several shareholders have recently announced their backing of the ‘Boycott Woolworths’ campaign and demand for the company to ends its Israeli trade relations.
For the first time in years, both the like-for-like food sales volume was negative and the like-for-like clothing sales volume was negative. The retailer’s domestic food sales for the 20 weeks to November 16 advanced 4% less than the comparable period of 2013. Clothing sales growth slowed by 2,2% from a year earlier.
Many have attributed the negative figures for Woolworths food and clothes sales as well as the drop in share price to the growing campaign. Early in August 2014, a call for the boycott of Woolworths until it ends its Israeli trade links was made by the NC4P, BDS South Africa, COSATU, ANC Youth League, MJC and various others. The Boycott Woolworths campaign, as it has been dubbed, has received wide spread attention and support from various South African Government ministers, artists, well known personalities and anti-apartheid stalwarts.
According to BDS South Africa, the ‘Boycott Woolworths’ campaign has had a significant impact on the company, in terms of its PR and sales. However, the pro-Palestinian lobby group said it cannot claim full and complete credit for the drop in Woolworth’s share price, food sales and clothing sales. Other factors have also contributed to the drop in Woolworths sales and share price but what is undeniable is the effect of the ‘Boycott Woolworths’ campaign on the company.
In what may turn out to be a PR and strategic blunder, Woolworths has chosen to take legal action against the Boycott Woolworths campaign instead of meeting with activists. To date, the management of Woolworths has refused to meet so that the issue may be resolved.
“It simply does not make business (nor moral) sense for Woolworths to hold on to a R12 million rand trade relationship with Israel when Woolworths is loosing customers and suffering from a PR nightmare. In recent weeks Woolworths has been inundated with Tweets, Facebook mentions and other messages related to its trade with Israel,” said Kwara Kekana from BDS South Africa.
“Woolworths has adopted a ‘head in the sand’ approach of not responding on social media to such comments and also refusing to meet with BDS South Africa, the National Coalition 4 Palestine and the other organisations advancing the Boycott Woolworths campaign. They are refusing to meet with the organizers of the boycott to their own financial detriment.”
“It would seem that the disappointing and arrogant message that Woolworths is sending to consumers and the public including a growing number of shareholders is that it cares more about defending trade with Apartheid Israel than company performance.” VOC