Commenting on the impact of the strong rand, the group said it expected the impact of the foreign exchange loss to reverse during the financial year ended 30 June 2010.
Woolworths said in line with its stated treasury policy, it takes out forward exchange contracts (FECs) to cover imported merchandise commitments.
It said FECs with a value of US$50 million covering imports for the summer season remained open as at 30 June 2009.
The group said it used the pool method to manage these commitments and to provide an effective economic hedge.
"However due to the complexity in documenting the relationship between hedging instruments and hedged items required in terms of IAS 39, the group does not apply hedge accounting to these transactions," it said.
The FECs were taken out at an average spot rate 15% higher than the year end rate.
"As the selling price of the merchandise, for which the cover was taken out as an economic hedge, will be based on the forward contract rate, the group expects the impact of the foreign exchange loss to reverse during the financial year ended June 2010," it said.
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