Edgars report improved set of financial numbers

Published: 11 March 2014

Edgars Stores Limited reported a set of improved financial numbers showing an 8% growth in revenue to $67.7m. The Edgars chain was the biggest contributor to revenue at 80% while the Jet chain contributed the balance.

The group added 9 new outlets to its stores during the year to close the year with 49 stores. Credit sales contributed 72% of the $51.4m Edgars' sales while the gross trading area increased from 26,020m² to 26,572 m².The Jet Chain recorded a 17% increase in sales to $13m but profitability shrunk 40% to $0.5m.

The Jet chain added 4 new stores to close the year with 23 outlets in the process increasing the gross trading to 11,125m² from 8,337m². The manufacturing division made a profit before tax of $0.4m compared to a loss of $0.3m in the prior year. Overall, group profit before tax was up 12.3% to $5.3m. The group managed to trim its cost of capital during the FY 13 to $1.7m compared to $2.7m. The net profit margin improved by 19 basis point to 6.26% to close the year at $4.2m.

Total assets declined by 1% to close the period at $43.4m due to a significant drop in cash and cash equivalent to $0.9m from $4.7m. Trade receivables were maintained at $23.7m while stocks increased from $9.6m to $11.2m. Increased investment in stores saw PP&E closing the year at $7.1m from $5.4m in the prior period.

Cash flow from operation was the biggest improvement on Edgars' numbers jumping from $1.1m to $3.6m. The group managed to improve its working capital investment as well as reduce the interest obligation which was draining the cash flow for the company. The group utilised $2.7m in the procurement of PP&E compared to $2.2m in the prior year.

In a research not, Tonderai Maneswa of Imara Stockbrokers said, "Our view on Edgars has largely been informed by the then bulging debtors' book as well as a weak working capital management, however the FY 13 numbers show a significant improvement on debtors which were maintained at last year levels."

Maneswa believes that the group's strategy to improve customer shopping experience as well as variety and more value resonates with Imara's view that a reasonably priced product can capture increased market attention in a largely depressed clothing retail space. He advised shareholders to accumulate Edgars shares.
- businessdaily

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