Trading update for the three months ended 8 July 2006
12 July 2006
At Edcon's 60th Annual General Meeting today, Chief Executive Steve Ross updated the meeting on trading for the past three months as follows:
Consumer spending remains strong and retailers are still benefiting from low interest rates and real wage growth. As anticipated, the quarter under review has seen a mild easing of retail sales growth from last year's exceptionally high levels.
The Edcon Board is pleased to report that total sales for the first three months have been in line with internal expectations and rose by 15% compared with the same period last year.
By chain, sales growth rates were as follows:
Sales Increase Inflation
Average Selling Price
Department Stores Division
Pleasingly, having positioned all the chains optimally over the past few years, they have all achieved gross profit growth in excess of their respective sales increase. Similarly, diluted headline earnings per share for the first three months rose at a faster rate than sales. This was accomplished with a rise of 12% in average retail space for the quarter.
Inventory levels are appropriate in relation to projected future sales and seasonal winter merchandise has been cleared.
Collections for the quarter exceeded budget and the quality of the debtors book continues to be sound and demonstrates a sense of responsibility from consumers. At the June 2006 billing date, as anticipated, 84% of the debtors" book was current and able to buy, compared with 86% in June last year.
As sales and earnings for the quarter were in line with management expectations, the Edcon Board believes that, assuming no material changes in the macroeconomic environment, the earnings guidance provided in our 2006 annual report remains appropriate for the half year to September 2006, namely that "shareowners can expect another meaningful rise in earnings, ahead of the sales growth".