Long4Life opts not to pay dividend as share buybacks continue
The group expects consumer spending to remain constrained in the next months, but forecasts earnings growth in its year to end-February
Brian Joffe’s Long4Life said on Monday it has opted not to pay its interim dividend to end-August, as it considers further share buybacks and new acquisitions.
Constrained consumer spending is expected to continue to reflect in the group’s full year to end-February, it said on Monday, adding that it is targeting earnings growth and increased market share.
The group, whose portfolio spans Sportsmans Warehouse and Outdoor Warehouse, as well as beauty outlet Sorbet, reported a 4% fall in headline earnings per share to 15.4c for the six months ended August.
This excludes the impact of new accounting standards, which will change how companies account for leases on their balance sheets. Long4Life will adopt these in its full year to end February 2020.
CEO Brian Joffe spoke to Business Day TV about the group's interim performance and why the company withheld its interim dividend.
Trading profit was relatively flat at R176.2m, while revenue increased by 20% to R1.84bn.
Sales in its sports retail division, principally Sportsmans Warehouse, were pleasing, the group said, growing 12.7% year on year.
The division’s gross profit margin fell 2.4 percentage points to 46.7%, primarily due to accelerated sales of promotional and marked-down goods, though the company is expecting a second-half improvement.
Revenue of the group’s beverages division, which includes Chill Beverages and Inhle Beverages, increased 20%, with the company expecting increased sales during the summer months.
The group’s personal care division, which includes Sorbet and Lime Light Hair & Beauty, experienced like-for-like revenue growth of 13.6%. The like-for-like measure strips out the effect of new stores and closed stores.
“While interest from potential franchisees remains strong, assessing and securing suitable sites for franchisees remain a challenge,” the company said.
During the period the company had taken a 4.6% beneficial interest in Spur, having upped it to 14.4% after the end of the period.
The group spent R109.1m in acquiring 26.8-million of its own shares at an average price of R4.07 per share.
“The group intends continuing to buy back its shares on the open market at suitably priced levels to maximise shareholder return,” the group said.
Long4Life’s share price was down 0.5% to R3.98 as of 10.15am on Monday, bringing its year-to-date loss to 12.53%.
Correction: an earlier version of this article stated Long4Life withheld its dividend, when it simply opted not to declare one