JD Group earnings down 45%

Hardline retailer JD Group has reported that its diluted earnings per share were down 45% to 221.5 cents for six months ended February 29, while diluted headline earnings per share also fell 45% to 220.2 cents.

The group declared a lower interim dividend of 111 cents compared with the 246 announced at the same time in 2007. Tighter conditions have affected the company. The ongoing interest rate hikes together with increases in food and fuel prices have significantly curbed consumer spending.

“The current economic conditions are not conducive to an improvement in consumer spending going and therefore, we expect top line sales to remain under pressure for the foreseeable future,” it said.

However, it noted that its approach to providing credit has been conservative over the last two years and this together with the inherent strength of the group's cash flow and balance sheet, places it in “an advantageous position”.

“This bodes well for the group's ability to see out this extremely difficult trading cycle,” it said.

Bad debt write-offs and impairment provision costs increased year-on-year by 38%, resulting in the operating margin declining to 18.8%. The provision for doubtful debts has increased by 27% from R581 million at August 2007 to R740 million at February 2008.

Bad debt provisions as a percentage of total arrears have moved from 73% to 80% for the same period, reflecting a significant level of provisioning against contractual arrears.

Sale of merchandise over the period dipped by 3% to R4.935 billion, while revenue fell 4% to R6.633 billion. Operating expensed were up 6% to 2.123 billion and cost of sales thus only fell 2% to R3.441 billion.

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