Edcon’s weaker retail sales affect revenue
EDCON, South Africa’s biggest fashion retailer, yesterday blamed weaker retail sales for the 5.8 percent drop in total revenue in the second quarter of its 2018 financial year.
Edcon, whose brands include Edgars, Jet and CNA , said total revenue declined to R5.9 billion in the second quarter of 2018 from R6.26bn in the second quarter 2017, due to weaker retail sales.
Retail sales tanked by 6.2 percent to R5.401bn from R5.761bn, impacted by the sale of Legit, the exit of non-profitable international brands and the closure of unprofitable stores. Edcon sold its Legit brand to Retailability for R637 million.
Edcon also attributed the lower retail sales to weak consumer demand and fierce price competition through ongoing promotions and clearance activity by competitors and strategic intent to exit non-profitable stores.
Like-for-like retails sales weakened by 2 percent, however, positive retail sales growth was achieved in ladies’ wear in both Edgars and Jet, children’s wear, footwear and cosmetics in Edgars and Cellular in the Jet division.
During the second quarter 32 stores were opened and 50 stores were closed.
Damon Buss, an equity analyst at Electus Fund Managers, said yesterday that negative like-for-like sales growth indicates Edcon are still losing market share.
“It is positive that Edcon are exiting under-performing stores and brands,” he said.
Earlier this month Edcon rival TFG said credit turnover growth had risen by 6.2 percent in the six months to September, despite sluggish trading in the general retail sector. Edcon lost 383 000 credit customers, excluding Edgars Zimbabwe, in the second quarter of 2018.
On a twelve month rolling basis, credit sales excluding Zimbabwe decreased to 35.4 percent in the second quarter 2018 from 37.1 percent of total retail sales in the second quarter 2017.
It also said its in-house trade receivables book as at September 23, 2017, was R660m, from R177m as at September 24, 2016, and had increased by R242m compared to R418m as at March 25, 2017, following the revised arrangement with Absa implemented in the third quarter of 2017.
Credit sales decreased by 3.8 percent compared to the prior period, while cash sales plunged by 7.6 percent.
Edcon said Mike Elliot would be joining the group as Edgars chief executive designate, with effect from December 4, 2017. Elliot was expected to assume the role of chief executive on February 1, 2018, and replace Andrew Levermore who has resigned from the group.