Describe  the following newspaper article in your words using accounting theories like International accounting, measurement, normative accounting theory etc.

David Jones property deals boost South Africa parent’s profit
Sue Mitchell
Jan 25, 2021
South African retailer Woolworths has flagged a 70 per cent to 80 per cent increase in December- half earnings, partly underpinned by the sale of David Jones’ menswear store and lease negotiations. David Jones’ underlying earnings are likely to fall in the December half, judging by the 8.8 per cent fall in total sales and 10.5 per cent fall in same-store sales in the 26 weeks ended December 29. However, Woolworths, which acquired David Jones in 2014, said it expected to book profits from the sale of the David Jones menswear store in Bourke Street Melbourne and gains from renegotiating leases.

Woolworths sold the men's wear property for $121 million in July, making a book profit of $23.5 million, while the renegotiation of various David Jones leases resulted in lease modification and cancellation gains under lease accounting standard IFRS 16 of about 667 million rand (pre-tax) or
$57 million.

These one-off gains, combined with stronger earnings from Woolworths’ South African food business, were expected to boost Woolworths’ earnings per share by 70 per cent to 80 per cent to between 279¢ - 295.4¢ a share.

Woolworths subsequently sold David Jones’ flagship Elizabeth Street store in Sydney a few days before Christmas to Charter Hall for $510 million under a 20-year sale and leaseback deal.

Gains from this sale will be included in Woolworths’ June-half results and will significantly strengthen Woolworths’ balance sheet and give the Australian businesses a more sustainable capital structure.

Woolworths said trading conditions across the group were further impacted by the coronavirus, with footfall falling in larger shopping centres and CBD locations, but sales momentum improved across all businesses in the final six weeks of the December-half.

Efforts to stimulate sales, strengthen online capabilities, manage inventory levels and sell properties led to positive cash flows and reduced debt levels in both South Africa and Australia. While David Jones sales fell sharply in Victoria because of the extended three-month lockdown, when Melbourne stores were closed, sales in other states rose 5.9 per cent. This included online sales, which rose 55.5 per cent, reaching 17.7 per cent of total sales.

At Country Road Group, which includes Country Road, Trenery, Mimco and Politix, sales in the last six weeks of the December-half rose 6.7 per cent as stores in Melbourne reopened. But sales for the 26 weeks fell 5.2 per cent, with same-store sales down 2.4 per cent. Excluding Victorian stores, Country Road Group sales rose 8.2 per cent, with online sales up 52.5 per cent, reaching 31.6 per cent of total sales.

South African Accounting Standards Board

The highlight was Woolworths’ food business in South Africa, where total sales rose 10.9 per cent over the half and by 12 per cent in the last six weeks, offsetting an 11.2 per cent decline in sales from fashion, beauty and home.

David Jones’ fall in sales augers poorly for Myer, which was also forced to close all its stores in Melbourne for three months. Myer is expected to release January-half sales and profits in March.

Woolworths plans to release its interim results on February 25.

Answer rating: 100% (QA)

In an article from The Australian Financial Review Sue Mitchell explains that the South African reta... View the full answer