Cape Town – JSE-listed home shopping and financial services group HomeChoice International increased headline earnings by 17.1% to R225 million in the six months to June 2017, driven by tight credit management and retail sales growth of 24%.
Operating profit increased by 17.2% to R329 million as the operating margin improved by 70 basis points to 25.0%.
The interim dividend has been increased by 15.5% to 82 cents per share.
Malta-based HomeChoice International is the holding company of HomeChoice, southern Africa’s largest home shopping retailer, and personal loans and insurance provider FinChoice.
CEO of the South African operations, Shirley Maltz, said the group performed well in the current retail and credit environment where high unemployment and persistent inflation in food and household expenditure continued to exert pressure on consumers.
Group revenue increased by 14.0% to R1.3 billion, with retail revenue increasing 14% to R997 million and financial services 14.2% to R317 million. Retail volumes grew by 18% with strong demand in the core textiles range and further expansion of the branded goods offering.
The retail gross profit margin strengthened by 150 basis points to 49.4% despite the increased mix of branded merchandise at lower margins.
Maltz said HomeChoice is one of the leading digital retailers in the country and focuses primarily on the urban female mass market which is expected to show continued strong growth.
“Digital is our fastest growing channel and represents 15% of retail sales. Credit extended via digital channels across the group increased by 38% to R507 million, representing 32% of total credit extended in the past six months. The financial services business is primarily a digital business with 67% of all transactions concluded on mobile phones,” she said.
Group debtor cost growth of only 0.4% was well below revenue growth and reflects prudent credit risk management and better credit performance in both businesses. “Our investment in collections resources and processes has contributed to debtor costs as a percentage of revenue reducing from 15.7% in 2016 to 14.6% for the reporting period,” she said.
The group remains cash generative and increased cash generated from operations by 19.8% to R174 million through efficient management of working capital, with a cash balance of R129 million at the end of the reporting period.
On the outlook for the remainder of the financial year, Maltz said trading conditions are expected to remain difficult with continued financial pressure on consumers. “In this environment, our priorities will be to maintain tight credit policies, cash collections and stringent cost control”.
“Digital engagement with customers remains a key strategy as we look to expand digital penetration in our target customer market, particularly via the mobile phone,” she added.
Issued by Tier 1 Investor Relations on behalf of HomeChoice International
For further information kindly contact
Shirley Maltz, CEO (South Africa) 021 680 1057