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Cape Town - Unlisted retailer Edcon on Thursday posted a 5.7% rise in retail sales to R6.6bn for the quarter ended June 28 2014.
Significantly more consumers paid cash for their goods (retail cash sales up 15.5%), an indication, the retailer says, that customers are responding positively to the changes it made over the last few quarters and the continued impact of the “Thank U” loyalty programme.
Group credit sales, however, continued to decline in the quarter decreasing 3.3% and contributing 46.5% of sales in the review period compared with 50.8% this time last year.
Edcon, South Africa’s largest non-food retailer, said cash management remains a key priority. During the quarter, better stock management together with improved payment terms with suppliers resulted in an improved cash flow.
Retail sales from operations outside South Africa were up 17.6%.
Edcon now has 183 stores outside of South Africa, up from 145 in the prior comparative period. During the quarter, 14 new stores were opened (including one store in Zimbabwe), while the first three stores in Ghana are still planned to open in the current financial year.
“We have delivered an acceptable set of results over the last quarter considering the current market conditions and are satisfied that group performance has stabilised," said Edcon CEO Jürgen Schreiber.
He said improvements in retail sales were supported by strong cash sales that are 15% higher and evidence of customer support. "Both the Edgars and Discount divisions delivered sound retail sales despite declining credit sales, which is particularly encouraging at a time when customers remain constrained."
The Edgars division - which includes Edgars, Boardmans, Topshop Topman, Tom Tailor, La Senza and Accessorize - grew retail sales 6.3% compared to the first quarter 2014. Despite a 3.3% decline in credit sales, same store sales increased 2.8% and total cash sales grew strongly across most categories increasing 19.7%.
Edcon said the roll out of mono-branded stores will pick up in the remainder of the year as new brands such as River Island launch flagship stores.
CNA sales increased a marginal 0.9% and same store sales were 2.3% higher compared to the first quarter 2014. The average space decreased 5.6% and total number of CNA stores decreased to 192 as the right-sizing of the business continues.
The Discount division’s sales increased 5.8% and same store sales were 2.2% higher compared to the first quarter 2014. The growth in retail sales was supported by cash sales, up 13.3%, while credit sales reduced 3.5%. The division was impacted by a relatively less buoyant performance from key categories, but it was pleasing to note a good improvement from children’s wear sales.
The Discount division includes Jet, JetMart and Legit.
Edcon believes that operating cash flows, amounts available under the super senior revolving credit facility and proceeds from the sale of our accounts and trade receivables will be sufficient to fund debt service obligations and operations, including capital expenditure and contractual commitments, for the foreseeable future.
