Incredible Connection hit by price deflation

Both Incredible Connection and HiFi Corp continued to be negatively impacted by price deflation across most of the technology and consumer electronics categories, retailer JD Group (JDG) said on Monday in its interim results.

The group said headline earnings per share were up 14.2% on a like-for-like basis to 170.1 cents for the four months ending December 2011.

JD Group noted that comparability between its interim results, and those previously reported for the six months ended February 2011, was difficult due to a change in the financial year end from August 31, to June 30.

“The financial performance for the four-month interim period from September 1 to December 31, 2011 is pleasing, with solid results reported across all divisions,” it said.

Overall, revenue increased 11.4% on a like-for-like basis to R10.7 billion, while operating profit on a like-for-like basis improved 24.2% to R590 million, the group said.

For its Cash Retail division, which includes Incredible Connection, HiFi Corp, and SteinBuild, for the first time JD said it “reported satisfactory results, delivering 18.8% growth in operating profit from R69 million on a like-for-like basis in 2010, to R82 million in 2011.

“It is encouraging to note the further improvement in margins, with the gross profit percentage increasing from 23% on a like-for-like basis in 2010 to 24.7% for the four months ended December 31, 2011. Both Incredible Connection and HiFi Corp continue to be impacted negatively by price deflation across most of the technology and consumer electronics categories,” JD Group said.

It announced a slight 1.5% rise in revenue to R2.15 billion in the 4 months to December 31, 2011 compared to R2.12 billion in the 4 months to December 31.

“The performance in the first four months gives us reason to be positive about the next six months,” JD Group said.

The group highlighted revised retail positioning at Incredible Connection along with a “shift in merchandise mix”, and for HiFi Corp, it pointed to a repositioning of the brand with 16 of the 36 stores revamped, along with new sites in super regional shopping centres.

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Incredible Connection hit by price deflation