Edcon reports improvement in profit despite decline in sales
Net profit is up to R2bn but its retail sales suffered from ‘fierce price competition through ongoing promotions by competitors’
Unlisted retail group Edcon reported on Tuesday that its net profit improved by 3.8% to R2bn, although sales declined in the September quarter from the matching period in 2016.
Edcon said its overall retail sales suffered from "fierce price competition through ongoing promotions by competitors" and its decision to close unprofitable stores.
In its flagship Edgars clothing chain, sales declined 0.9% to R2.46bn during the three months to September 23. Sister clothing chain Jet’s retail sales declined 1% to R2.28bn.
Edcon’s "speciality" division, which houses news agency CNA and Edgars Shoe Gallery, reported a 41.5% decrease in sales to R463m because the comparative period included Legit, which was sold in January. Excluding Legit, the speciality division suffered an 11.4% decline in sales. CNA’s sales fell 12.1%.
"Our trading environment remains challenging as consumer demand is weak on the back of tight credit conditions, low growth in consumer disposable income, political uncertainty and restrictive fiscal policy," Edcon CEO Bernie Brookes said.
"Despite this, it is pleasing that the group’s strategic transformation is delivering positive retail sales growth in certain merchandise categories, such as ladieswear in both Edgars and Jet, as well as cellular in Jet, while childrenswear, footwear, cosmetics and cellular within Edgars are also starting to show signs of change."