Trading update for the quarter ended December 2005
12 January 2006
Consumer spending remained buoyant during the quarter under review, boosted by sustained high levels of consumer confidence resulting from low interest rates and real wage increases.
Against this background, the Edcon Board is pleased to report healthy sales growth of 21% for the quarter, when compared with the same 13 week period last year.
By chain, sales growth rates were as follows:
Sales increase for quarter ended 31 December 2005 %
Contribution to sales %
Average retail space increase %
These results were achieved with inflation at only 3% in Edgars and deflation of 18% in Jet. Pleasingly, all major merchandise categories recorded strong growth with sales of cellular products exceeding expectations. As the margin earned on these products is less than the average for clothing and footwear, this contributed to the slower rate of growth in gross profit of 17% for the quarter.
Inventory levels at only 4% above last year are well positioned in relation to projected future sales. The Group's moving annual stockturn improved from 5,9 to 6,0 times, reflecting improved operational efficiencies.
Collections for the quarter were ahead of budget and the quality of the debtors' book continues to be sound. At the December 2005 billing date, as anticipated, 87% of the debtors' book was current and able to buy, compared with 89% in 2004. Moving annual bad debt ratios were within targeted levels.
As sales and earnings for the quarter were in line with management expectations, the Edcon Board believes that the earnings guidance provided in November 2005 for the financial year to March 2006 remains appropriate, namely that the Group "should deliver another meaningful rise in attributable earnings, along the lines of the growth in sales, for the year as a whole."
This update has not been reviewed and reported on by Edcon's external auditors.