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Johannesburg - Unlisted retailer Edcon on Tuesday reported a 3.1% increase in total revenues to R26.7bn for the year ended March 2013‚ while retail sales increased by 2% to R25.2bn.
Same store sales increased by 0.4% following an encouraging last quarter‚ which saw retail sales increase 5.9% while same store sales increased 4.0%.
For the 52 week period‚ gross profit was up 1.8% to R9.2bn and the gross profit margin remained relatively flat at 36.5%‚ primarily due to a 1.2% point increase in the Discount division margin that was offset by lower margins in the Edgars and CNA divisions.
Store costs increased 8% to R5bn. While increases in rentals remained high‚ utility cost increases were well managed‚ and further productivity savings from the store optimisation project in the Discount division assisted in reducing overall store costs‚ the group noted.
Other operating costs increased by 3.4% to R3.7bn.
Pro forma adjusted EBITDA decreased 13.1% to R2.8bn mainly because total operating cost growth remained higher than revenue growth notwithstanding sound store cost management.
The group’s total net debt was R19.5bn‚ a 25.1% reduction from a year ago.
CEO Jürgen Schreiber said over the 2013 financial year focus was on establishing Edcon for future growth.
“As such we refurbished elements of more than 120 stores across the Group‚ improved sourcing and opened new retail formats and commenced trading in new countries. Though this has been disruptive to the business‚ we expect to see positive benefits from this investment in the medium term. The closing of the sale of the trade receivables book to Absa in the third quarter of our financial year 2013 was significant and transformative‚ with the proceeds used to strengthen our balance sheet. Our Thank U loyalty programme continues to exceed expectations‚ growing to over nine million customers in just one year‚ “ he said.
The group added that the debt maturity profile recently improved through a refinancing program. This involved the repurchase of all the senior secured floating rate notes due in 2014‚ the issuance of EUR300 million in new fixed rate notes‚ due 2018‚ and the conclusion of a R4.12bn term loan and addresses financing needs until June 2015.
“ It also goes a long way to achieving Edcon’s objective of migrating foreign denominated debt into South Africa Rands‚ thereby removing currency risk‚” it said.
“Over the last financial year‚ we opened 147 new stores that included 128 conversions which‚ combined with refurbishments‚ resulted in investments in store fixtures of R530m‚” said Schreiber.
The Edgars division grew retail sales 4.1% to R13.3bn largely due to the addition of 69 new Edgars Active stores and increased promotional activity. Same store sales were slightly lower at R12bn from R12.2bn due to the disruptions resulting from store refurbishments and strategic changes to the supply chain.
A revitalised marketing strategy‚ merchandising teams and improved sourcing methodologies have also been established and it is expected that these strategic changes will continue into the first half of the next financial year and that the benefits will follow in the second half of that financial year.
The Discount division’s retail sales were unchanged at R9.8bn underpinned by higher same store sales growth of R9.1bn‚ or 2.1%‚ across all formats.
CNA retail sales increased marginally to R2.1bn and on a same store basis sales grew 2.4% to R2.0bn. Comparable stores sales growth was negatively affected by lower mobile phone sales and extensive revamps and layout changes during the financial year. Gross profit for the financial year was R670m‚ only slightly down on the R679m reported in the previous financial year.
“The continued growth in our other African operations through the Jet‚ JetMart and Edgars Active formats is encouraging and the company continues to expand its footprint at a steady pace. Rest of Africa sales contributed 7.1% of total retail sales for the financial year 2013‚” Edcon said.
