Unlisted retail giant Edcon, which was bought by private equity company Bain last year in a R25 billion deal, on Thursday, reported a 9% increase in sales to December 31.
The retailer, which owns Jet and Edgars, said sales grew to R15,9 billion in the first nine months of the year, while third-quarter sales grew to R7,4 billion from R6,7 billion.
Earnings before interest, tax, depreciation and amortisation grew 12% to R2,6 billion in the nine months.
However, finance costs moved up from R12 million a year ago to R672 million in the third quarter.
The company also lost R110 million in a net fair value movement on notes and associated derivatives.
Net profit in the third quarter dropped from R786 million a year ago to R184 million, while costs increased. The company's store costs grew from R857 million to R1 billion, while restructuring and acquisition costs increased from R11 million to R62 million.
Edcon had 1141 stores at the end of December compared with 947 stores at the end of December 2006. Bain paid R25 billion for Edcon in May last year and about R18 billion of the price was on Edcon's books.
Absa Asset Management Private Clients analyst Chris Gilmour said the debt was expected to stay on Edcon's books for a substantial amount of time.
However, the debt was not likely to hamper the company's ability to trade. Same store sales grew 4%, driven by growth in children's wear, footwear and ladies' wear, together with growth in books, stationery, cards and digital products in CNA.
Discom, which was acquired at the end of August, also contributed to this growth.
Gilmour said the rate of retail growth indicated the company could be losing market share.
Edcon, which had 4,1-million active accounts, said net bad debts were 11,2% of debtors compared with 11,4% last year.
Source: Business Day
Published courtesy of
