Long4Life shares rise on the JSE, despite reporting a decline in interim earnings
DURBAN – Despite Long4Life reporting an interim decline in earnings, chief executive Brian Joffe expects buoyant summer sales ahead and forecasts an annual profit.
The share price rose 2.75 percent to close at R4.11 on the JSE on Monday.
The lifestyle group, with brands including Sportsmans Warehouse and Outdoor Warehouse, Chill Beverages and Sorbet among others, reported a 4 percent decline in headline earnings per share to 15.4 cents a share for the six months to end August.
Chief executive Brian Joffe said Long4Life was targeting profit growth for the full year, which was underpinned by strong brands and services that remained appealing to many consumers.
“Given the seasonality of the businesses, buoyant sales are anticipated in the summer season ahead,” Joffe said.
However, he cautioned that the key to achieving sustainable growth in the medium-term was an improvement in the economy, continued demand for the group's brands and services while executing efficiently.
“Our objective of creating the lifestyle group of choice in South Africa remains firm and intact,” Joffe said.
The group reported a 20 percent increase in revenue to R1.84 billion, while trading profit was flat at R176.2 million at a reduced margin of 9.6 percent.
The group acquired a 4.6 percent stake in Spur Corporation, in what it terms a strategic development, for R304.4m for an additional 12.7 million shares in Spur.
The total number of shares held in Spur at the reporting date amounts to 13.7 million, representing a beneficial interest of 14.4 percent.
“The group's balance sheet strength continues to provide opportunities to assess internal and external possibilities. Management will continue to consider, in a diligent and cautious manner, acquisitions and trading opportunities on which to capitalise and grow market share,” the group said.
It added that given the strategic developments, in particular the share repurchase programme undertaken by the company, no dividend has been declared during the period.
The group spent R109.1m acquiring 26.8 million of its own shares at an average price of R4.07 a share.
“The group intends continuing to buy back its shares on the open market at suitably priced levels to maximise shareholder return,” the group said.
The group's sport and recreation division reported a 12.7 percent increase in revenue to R1bn. The division houses Sportsmans Warehouse and Outdoor Warehouse.
Its beverage division, consisting of Chill Beverages and Inhle Beverages, reported a 20 percent increase in revenue to R657.1m.
It said that Chill Beverages’ investment in production capacity and plant upgrades together with increased expenditure in marketing and advertising had not yet been matched by increased sales.