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Senior Business Reporter
LOW disposable income and the heightening job insecurity have undermined consumer confidence and demand, leading clothing retailer, Edgars said. In its unaudited interim results for the 26 weeks ended July 11, 2015, Edgars group said its operations have not been spared from the effects of the depressed economic climate.
The listed concern posted a 13 percent jump in after-tax profit to $1,2 million during the period under review driven by the group’s extended credit repayment facility and various promotions introduced to stimulate consumer spending.
“Fast declining economic fundamentals, combined with low disposable incomes and heightening job insecurity have undermined consumer confidence and demand,” said Edgars.
“The Edgars chain wasn’t spared from the effects of the declining economy and the high base of 2014 when the 12 months to pay offering boosted turnover.”
From the test carried out in 2014, the group reported some loss of market to Jet Stores as some cash-strapped customers favoured value offerings of the discount chain.
Due to the prevailing negative economic climate, the group’s revenue grew by one percent to $30 million for the period under review.
“The strengthening United States dollar viz a vis the rand has brought to the fore the need to focus on cost containment.
“Retailers had to resort to various promotions to stimulate consumer spending. Despite a negative sales growth of one percent, profit after tax grew to $1,2 million, 13 percent ahead of the same period last year,” said the firm.
The group’s sales decreased by 11,2 percent from 2014 and profitability decreased to eight percent of sales from 17 percent prior year.
Edgars said Jet’s contribution to group turnover increased to 27,1 percent from 18,8 percent the same period last year.
“This was achieved through the granting of credit facilities to customers throughout the chain. Until mid-April, Jet was offering credit only in test stores that were mostly in outlying centres. The success of this chain was built on credit and benefits of scale,” it said.
The growth in debtors, the group said, continued to be well managed.
Total trade debtors were $29,8 million, net of provisions for doubtful debt of six percent, which provision was increased as a conservative reaction to the deteriorating trading environment.
Ten percent of debtors’ book related to Jet customers.
While an increase in bad debt was anticipated, the quality of the book remains excellent with average gross handovers at 0,5 percent.
Factory sales decreased by three percent and profitability reduced to $61,000 from the $176,000 achieved last year.
Gross borrowings grew on the expanded debtors’ book and were $23,2 million at the half year compared to $16,7 million in 2014.
“We anticipate that gearing will be maintained at the current level of around 1:1 throughout the year. Net of interest bearing debtors gearing remained at zero,” said Edgars.
Bongani Ndlovu
Online Reporter