Holdsport Limited, South Africas largest specialty sporting goods retailer, reported sales rose 10.5 percent to ZAR374.5 million ($45mm) in the year ended Feb. 28.
The Holdsport Limited group includes the Sportsmans Warehouse and Outdoor Warehouse retail chains and Performance Brands, a wholesale business that owns and distribute the First Ascent and Capestorm brands.
Retail sales increased by 10.4 percent to ZAR1 321.3 million ($38 mm). Operating profit increased by 7.4 percent to ZAR243.3 million ($29 mm).
The growth came on top of strong growth in the year earlier period, when the rugby and football world cups spurred strong sales of replica apparel.
Like-for-like retail sales grew by 8.3 percent while the retail divisions experienced price inflation of approximately 2.9 percent for the year. Retailing space increased by 3.7 percent relative to the prior year.
The Sportsmans Warehouse division reported comparable store sales increased by 9.3 percent. Sportsmans Warehouse, which operates from 35 stores and has a substantial private label business, is South Africa’s largest full-line sporting goods retailer. Like-for-like sales increased by 5.2 percent at the Outdoor Warehouse division, which is the largest specialty outdoor retailer in South Africa. It operates 19 stores.
Performance Brands achieved external sales of ZAR53.2 million, an increase of 11.9 percent.
Performance Brands acquired its premises for ZAR12.0 million and will construct an additional warehouse on this property in the next year for approximately ZAR12.3 million.
During the year the group incurred ZAR40.7 million in costs maintaining and expanding its retail operations and purchased the Capestorm trademark for ZAR8.2 million.
The group entered into a 50-50 joint venture agreement with Redefine Properties to purchase land in Philippi, Cape Town and develop a new distribution centre for its retail operations. The group will invest approximately ZAR51.0 million in this new distribution centre, of which ZAR19.8 million has already been incurred this year. This project is proceeding successfully and will be completed in July 2013.
Foreign exchange represented an expense of ZAR1.8 million compared to an aggregate profit of ZAR6.1 million during the prior year. The majority of the adjustment is included in cost of sales.
Core headline earnings amounted to 415.7 cents per share, a 7.3 percent increase on the previous year. Core headline earnings excluding the effect of foreign exchange adjustments increased by 11.0 percent to 418.7 cents per share.
Holdsport’s investment in working capital increased by 24.3 percent as a result of the increase in retail space and the effect of the weaker exchange rate on the cost of imported stock. It ended the period with inventory valued at ZAR346.0 milllion ($41mm), up 16 percent from a year earlier.
The current retail environment is challenging and we do not envisage an improvement during the remainder of the year, the company stated in its earnings release. We have signed leases to open a further two stores during the current year and remain confident that our strategies will deliver a unique and differentiated retail offering to the market.