Johannesburg - Retailer Edcon said on Thursday it maintained
its gross profit in the first quarter (at 0.9%) compared with the same period a
year ago‚ but retail sales were behind expectations and costs negatively
impacted adjusted EBITDA.
“Trading for the first two months was tough but returned to
acceptable levels in June‚” said Jürgen Schreiber‚ CEO of Edcon.
The quarter’s results consisted of two distinct trading
periods. Retail sales for the first two months of the quarter decreased 0.6%
compared to a 7.8% increase in sales for June as the weather turned colder. The
Edgars division has been impacted by the fact that implementation of various
strategic and operational initiatives remain at an early stage. Discount
division performance on a like-for-like basis remains “fundamentally on track”‚
despite the weakness in the first two months.
The Edgars division grew retail sales by 1.9% for the
quarter‚ helped by the conversion of certain Discomstores to Edgars Active.
Same-store sales fell by 2.5%. Edgars was negatively impacted by a weaker first
part of the quarter with like-for-like sales decreasing 4.9% in April and May
but increasing 1.7% in June. Aggressive markdown activity in the latter part of
the quarter decreased gross profit from 42.5% in the prior comparative period
Same-store retail sales in the discount division increased
5.1% for the quarter‚ with only a 1.4% gain in April and May before a 14%
increase in June. Discount division experienced market share gains in several
important categories and reported improvements in clothing margins‚ pushing
gross profit margins up to 34.0% in the quarter‚ up from 33.2% a year earlier.
Retail sales increased 1.9% in CNA‚ increasing gross margins to 33.9% from
33.2% in the first quarter 2012.
Credit and financial services operating profit (reflected in
continued and discontinued operations) increased by R18m‚ or 9.3%‚ to R212m pre
tax in the first quarter 2013 following higher profits from the insurance joint
The company said its agreement to sell its private label
store card portfolio to Absa for approximately R10bn‚ as well as the
establishment of a long-term strategic relationship for the provision of credit
to Edcon customers‚ was expected to close before the end of the calendar year.
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