Retail turnover was up 8.1% at R10,548 billion reflecting the further slow-down in consumer spending, especially in the middle and upper income levels, the group said.
Operating profit grew 6.1% to R1,046 billion.
An interim dividend of 31.5 cents per share was declared, versus 29.5 cents a year ago.
Gross margin decreased slightly from 31.3% to 31.2%.
Following the disposal of a controlling interest in October 2008, Woolworths Financial Services is accounted for as a joint venture. This impacted the comparability of group revenue, expenses and finance costs.
Profit before tax and exceptional items grew by 18.1%, with improved profit from Country Road and one-off benefits arising from the sale of a portion of the financial services business.
Adjusted HEPS, which excludes a 75 million rand STC charge on the special dividend paid on 15 December 2008, increased by 26.9% to 72.2 cents per share.
Following the Woolworths Financial Services transaction, the company has returned cash to shareholders in the form of a special dividend of R750 million and open market share repurchases of R352,5 million.
The company said it intends to continue the share repurchase programme. However, in the light of current economic conditions, it intends to take a more cautious approach in the use of its cash and the levels of borrowings.
Woolworths retail grew overall sales by 5.3%. Clothing and general merchandise sales decreased by 0.6% for the period and childrenswear showed good growth, it said.
Food sales were up 9.5% for the period.
"Our average food price inflation of 12.1% is well below the average market inflation. The price movement of only 9.0% reflects our customers' demand for our essential food items.
Prices are now more competitive and we are better positioned to cater for our customers' needs," the group noted.
Total footage grew by 7.1%, with an increase of 4.9% in clothing and general merchandise and 14.7% in food at the end of December 2008, compared to the prior year.
Closing debtors' books at December 2008 were marginally up on the previous year and bad debts were well controlled.
Country Road again outperformed the Australian market, delivering excellent sales growth of 22% and growing pre-tax profit by a record 83.8% in Australian dollars.
Looking ahead, Woolworths said the economy is to remain depressed.
"Our challenge will be to continue to manage the impact of the significant shift in consumer spending and the downward pressure on prices, while retaining our difference of quality and innovation," the group said.
Cost and inventory management will be key drivers to manage profitability. Despite the relief from recent fuel price cuts and a reduction in the interest rates, Woolworths expects trade to remain difficult through the rest of the financial year.
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