HomeChoice expects earnings decline as pandemic continues to hurt trading
DURBAN - HOMECHOICE International expects its full-year earnings to decline in line with its half-year results as Covid-19 and trading restrictions continue to have a negative impact on its business.
As a result, the largest home-shopping retailer expects both its headline earnings per share (Heps) and earnings per share (Eps) to decline by between 52 percent and 67 percent, to be between 144 cents a share and 209c, down from 436c compared to a year earlier.
The Covid-19 pandemic continued to have an adverse impact on the macro-economic environment and consumer behaviour, which had resulted in challenging trading conditions for the group in the second half of the financial year, it said on Friday.
“Tighter restrictions imposed by the South African government in response to the second wave of the Covid-19 pandemic have further disrupted the group’s business operations,” the group said.
In the six months to end June results, HomeChoice reported a 54.6 percent decline in earnings while its operating profit was down by 46.7 percent on lower sales and prudent debtor provisions.
The group said it expected to report a similar performance in the second half of the financial year for the year to end December.
Last year’s decline in half-year earnings came after HomeChoice reported a strong performance in the first quarter to end March, with sales up by 11.9 percent and loan disbursements were down by 3 percent, compared to the same quarter a year earlier.
However, in mid-March the country announced a state of disaster to manage the impact of Covid-19 and a hard lockdown was imposed with only essential services allowed to operate.
Its half-year retail revenue decreased by 6.7 percent to R1.1 billion after reporting a 8.5 percent increase in its first quarter sales. However, this was offset by a 24 percent decline in the second quarter.
HomeChoice operates retail and financial services segments.
Despite the expected decline in earnings, the group said its liquidity and capital position continued to remain strong as a result of the focus on cash generation and management of working capital, with cash on hand of R415 million at the end of December, up from R378m at the end of June.
“The group is conservatively capitalised to take advantage of any improvements in the economy,” it said.
HomeChoice full-year results will be released on or about March 15.
The share price remained unchanged at R24 on Friday.