Trading update given at the 66th AGM held on 28 May 2015.
Trading environment remains tough.
We are performing well under the circumstances.
New stores
No new stores have been opened during 2015, which we believe is a year of consolidation of our operations.
Turnover (consolidated)
Unit sales
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12.6% increase over 2014 although 2.5% behind budget
Retail Sales $
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Trailing budget by 2.8% and 8.8% above 2014 to April
Margins
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Gross margin lower than last year at 44% (2014- 45.3%). The lower margins are attributable to the greater sales in the Jet (lower margin) chain and lower sales in the Edgars chain.
Factory – Profitable with YTD profit of $83 712. Edgars will continue to support the factory and local industry.
Operating profit
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YTD loss of $1.6million, vs $ 281k profit for same period 2014
Finance income
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Finance income (LPC and debtors interest) is $3.2million versus $1.1million for same period last year.
Finance costs
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Finance costs YTD are 40% ahead of last year, but well within current year budget. Increase over last year due to investment in debtors during 2014 and 2015.
Profit after tax
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PAT is well ahead of budget for the period to date at +212%. ($418k over LY is 438.5%), although it is largely on the back of finance income.
Debtors
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LPC increased over last year due to customers paying late, although they are still paying. Current debtors stood at 80.3% (Jet) and 74.4% (Edgars) at the end of April.
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Interest on debtors is growing as more customers convert to interest paying accounts. Additionally, we have rolled out Jet credit to all our stores, following a test in 9 stores last year. Customers can now open a 6MTP Jet account with interest.
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Number of accounts at end April 234 511, with 72% being active (April 2014- 70.1%)
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We have not been affected by the non-remittance of deductions from SSB as we do not collect through SSB.
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The Hospital Cash Plan offered to Club members continues to grow, with membership now at 124 000 members.
Stocks
Edgars Chain closed April overstocked at 14.2weeks cover and Jet stocks are balanced and indicative of the chain’s good performance at 10.9weeks cover.
Borrowings
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Total borrowings are $20.3m, of which $9m is current and the balance payable after April 2016.
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Finance costs amount to 4.6% of turnover to date
Overall
We continue to closely monitor the trading environment and review our targets accordingly. Our March promise remains largely unchanged; Gross Margins decreased to 44% (March promise- 44.9%) reflecting impact of Jet performance.
Linda Masterson
GROUP MANAGING DIRECTOR
28 May 2015