Edgars Stores analysts briefing - 25 March 2011

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Edgars Stores Limited (ZW) analysts briefing - 25 March 2011

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Edgars Stores analysts briefing - 25 March 2011

  1. 1. Results for the 52 weeks  ended 8 January 2011
  2. 2. Agenda• The retail environment• Salient features• How did we do it?• Year-end results• Trading and operational performance• Credit management• 2011 targets @ a glance• Questions
  3. 3. Retail Environment• Low disposable incomes• Demands for higher wages, NECs• Liquidity constraints• Retrenchments• High household utility bills• Competition from cheap and illegal imports• Civil servants bonus positive for Christmas• Cotton prices increase by 160% & wool 44%• Highly competitive credit retailing• General recovery in Zimbabwean economy
  4. 4. Financial HighlightsRetail sales of $35,5m 222%Unit sales of 2,9m 148%Trading profit of $4,2m 280%Earnings per share 0.62c 170%Investment in working capital of $14,1m 691%Trade and other receivables of $15,9m 471%No of debtors accounts 111,199 186%
  5. 5. How and what did we achieve• Took the opportunities of 2010 by the horns.• Recovery Strategy: capture market share through – a/c growth, – competitive pricing, – improved standards, – wider, more fashionable & better quality assortments, – Productivity.• Merchants, retailers and all people of Edgars rose to occasion, and, once they were pointed in a common direction, it was “game on”. This company is buzzing with optimism• It was a big hill to climb; early trading losses peaked at >$1m. So recovered $5m in 8 months @PBIT level
  6. 6. Income Statement $ 000’s 12mths % to 15mths % to Incr/ sales sales (Dcr) 2010 2009Retail sales 35,476 100.0 11,032 100.0 222Cost of sales (17,902) (50.5) (5,956) (54.0) 201Gross profit 17,574 49.5 5,076 46.0 246Employment costs (3,152) (8.9) (2,069) (18.8) 52Occupancy costs (2,756) (7.8) (1,171) (10.6) 135Trade receivable costs (840) (2.4) (263) (2.4) 219Other incl. depreciation (5,655) (15.9) (3,154) (28.6) 79Trading profit 5,172 14.7 (1,581) (14.3) 427Manufacturing profit /( loss ) (471) (1.3) (595) (5.4) (21)Group retrenchment costs (545) (1.5) (173) (1.6) 215
  7. 7. Income Statement $ 000’s 12mths % to 15mths % to Incr/ sales sales (Decr) 2010 2009Net finance costs (1,516) (4.3) (607) (5.5) 150Late payment charge – Accs 532 1.5 19 0.2 2,637Interest payable (2,046) (5.8) (626) (5.6) 227Pre-tax profit 2,640 7.5 (2,956) (26.8) 189Tax (expense) / credit (1,132) (3.2) 802 7.3 241After tax profit 1,508 4.3 (2,155) (19.5) 170Total comprehensive income 1,508 4.3 (1,222) (11.1) 223Basic EPS in cents 0.62 (0.89)
  8. 8. Cash Flow Statements $000’s 2010 2009 %Cash EBITDA 5,056 (1,875) 370Working capital movements (14,098) (1,783) 691Cash utilised in operations (9,042) (3,658) 147Finance costs paid (2,055) (634) 224Taxation paid (0) (0) 1,960Cash outflow from operations (11,097) (4,292) 159Net cash used in investing (185) (2) 9,509Net cash from financing 11,041 4,664 137Net (decrease) / increase incash & cash equivalents (241) 370 (65)
  9. 9. Financial Position $000’s Dec 2010 June 2010 Dec 2009Non-current assets 2,688 3,233 2,912Inventories 7,535 4,597 4,205Trade and other receivables 15,893 4,252 2,782Cash and cash equivalents 128 836 370Total assets 26,244 12,918 10,269Total equity 4,129 1,929 2,563Borrowings 15,698 8,409 4,658Other liabilities 6,417 2,580 3,048Total equity and liabilities 26,244 12,918 10,269
  10. 10. Borrowings• 75% of borrowings were for 90days to 1year• Cost of borrowings decreased from 38% Dec’09 to 18,2% Dec’10 (Feb 17%)• Of total, $3m guaranteed by a shareholder• Borrowings grew 237% compared to debtors book growth of 471%• Borrowings fully covered by trade receivables  (stock and debtors = 1.5 times cover).• Foreign suppliers have extended our credit terms and this will ease pressure on borrowings.
  11. 11. Operational Performance
  12. 12. Turnover Contribution (Consolidated) 2009 2010 72 % 84% 27 % 15 % 1 % 7 %Edgars Expressmart Carousel Edgars Expressmart Carousel
  13. 13. Turnover Group $000’s40,000 Edgars 35,47635,000 Express Carousel 29,94330,000 Total25,00020,00015,000 11,032 7,95010,000 5,335 2,936 5,000 146 198 0 2009 2010
  14. 14. Turnover Split C A S H S A L E SF 2 0 1 0 E x M 1 5 % C A S H S A L E S E D G C R E D I T 1 2 % S A L E S E D G 7 3 %
  15. 15. Edgars Chain Units 500,000 467,996 450,000 2010 2009 2003 400,000 346,144 350,000 300,000 228,780U N ITS 250,000 200,000 150,000 100,000 50,000 0 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
  16. 16. Stores Sales per SQM1200 Edgars 211000 Express 12800600400200 0 LY TY
  17. 17. Staff Numbers Stores Corporate Factory1200 3611000 800 265 258 600 427 242 400 200 234 0 Jan-09 June Dec Jan-10 June Dec
  18. 18. Staff annual unit sales per retail employee 6000 4,971 5000Units /Em ployee 3,609 4000 3,145 3,166 2,717 3000 2,309 1,544 1,738 2000 1000 0 2003 2004 2005 2006 2007 2008 2009 2010 YEAR
  19. 19. Manufacturing (EIP)• It was a tough year for most clothing manufacturers, most of whom retrenched mid-year.• Our factory staff compliment reduced by a further 229 (103 permanent, 126 contractors)• The factory supplies niches (for the chains) and imports and distributes finished product• Sales from finished goods imports were 8,6% of turnover• Through incentives; relaying of lines and consolidation of two factories into one, productivity improved but not enough to reverse losses. (470k @ YE)• Fabric prices increased at end of year. Factory has a fabric cover of 9 months at “old prices”.
  20. 20. EIP; average output per day1,400 2009 20101,2001,000 800 600 400 200 ‐ Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
  21. 21. Merchandise Procurement L Y T Y8 0 % 7 3 % 7 0 % 7 0 % 6 0 % 5 0 % 4 0 % 3 0 % 1 8 % 2 1 % 2 0 % 1 1 % 1 0 % 4 % 1 % 1 % 0 % I M P O R T S C A R O U S E L C A R O U S E L L O C A L I M P O R T S U P P LIE R S
  22. 22. Merchandise Stock Cover in Weeks3 0 . 02 5 . 0 2 5 . 12 0 . 0 1 6 . 7 1 6 . 7 1 5 . 01 5 . 0 1 2 . 8 9 . 8 1 0 . 31 0 . 0 8 . 7 8 . 2 7 . 6 5 . 0 0 . 0 J u n - 0 9 D e c - 0 9 J u n - 1 0 D e c - 1 0 F e b - 1 1 Edgars Express
  23. 23. Edgars Chain Account Growth120000 12000 11,365 CUMULATIVE  NEW ACCOUNTS 10,061 99,834 111,199100000 92,123 10000 8,567 7,527 80000 8000 85,028 7,711 5,935 58,873 74,967 7,095 60000 6000 46,870 66,400 41,909 54,865 40000 48,930 4000 44,504 4,008 20000 2,595 2,060 2000 2,387 2,366 0 0 JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC
  24. 24. Still a way to go (Potential?)250 227.1 231.9 234.6 Number of current 223.4 214.7 210.7 debtors accounts200 (000s)150 111.210050 38.8 0 2002 2003 2004 2005 2006 2007 2008 2009 2010
  25. 25. Customer Spend LY Purchases per account TY Purchases per account Total Purchasing accounts120 70,000100 60,000 50,000 80 40,000 60 30,000 40 20,000 20 10,000 - - JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC
  26. 26. Edgars Chain Debtors Stats 42%45% 39% 38% 38%40% 33% 34%35% 27%30% 22%25% 23% 22% 18%20% 14% 12% 12%15% 10% 9% 10% 8%10%5%0% 0.4% 1.5% 0.7% 0.5% 0.1% 0.7% 2003 2004 2005 2006 2009 2010Ave Past Dues Ave Cash Sales Ave Collections pm Ave Handovers
  27. 27. 2011 @ a glance 2011
  28. 28. 2011 @ a glance – Key objectivesMarket SharePrice, Standards & ProductivityGoal alignment/performance measurementNew product lines and servicesGenuine, quality international brandsInnovative & aggressive marketing$443K budgeted for store revamps$756K planned (11 stores incl. Borrowdale)$423K set aside for IT requirements
  29. 29. 2011 Targets @ a Glance• Turnover of between $48mil and $50mil• No of debtors >150K• Trading profit (PBIT) margin >15%• Finance costs <4.5% of turnover• Borrowings twice covered by stock & debtors.
  30. 30. Questions? Website www.edgars.co.zw

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