Picture: Leon Lestrade/African News Agency (ANA)
Picture: Leon Lestrade/African News Agency (ANA)

Sapo 2018 strike has knocked HomeChoice profit

By Sandile Mchunu Time of article published Mar 13, 2020

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JOHANNESBURG - Homechoice took a knock during the year to end December as a result of the 2018 strike by the SA Post Office (Sapo) as gross profit margin fell to 47.4percent from 49.6percent a year earlier. The had strike left it with higher than normal opening stock holdings at the beginning of the year, it said.

“The decision to aggressively promote and clear the surplus stock resulted in higher markdowns and a reduction in the gross profit margin for the year,” the group said. HomeChoice said the Sapo strike had also contributed to a 14.1percent fall in headline earnings per share to 436cents a share and a 14percent decrease in headline earnings to R455million.

HomeChoice, a leading participant in southern Africa’s retail homewares and financial services sectors, reported a 7.3percent increase in revenue to R3.5billion, boosted by strong loan disbursements growth of 27percent. Its retail sales had increased 4.9 percent to R2bn.

The group said fees from ancillary services had increased 18.6percent, while standalone insurance income had surged by 22.2percent in line with its diversification strategy to generate additional non-interest-bearing income. The group declared an annual dividend of 166c, 14.4percent lower compared to last year.

Chief executive Shirley Maltz said the results were a reflection of tough economic conditions and operational challenges. “In this environment it is critical not to deviate from your long-term vision and we are pleased with the strategic traction that we have gained in 2019,” Maltz said.

“We have been successful in accelerating our digital transformation, increasing the retail footprint and improving our customer experience. Our brands and products continue to resonate with customers, with our total active customer base increasing to 912000 customers, keeping us well on track to achieve our target of 1.2million customers by 2022," she said.

HomeChoice said one of the highlights for the year had been extending R2bn of credit through digital platforms. Maltz said a quarter of HomeChoice Retail customers were now registered for digital access, with FinChoice registrations up by 86percent.

Looking ahead, the group said it would continue to find opportunities to deliver value and a great experience to its customers despite the sustained muted economic outlook.

“The vibrant informal economy continues to show growth as more individuals supplement their primary income with an income derived from the informal sector. Potential risks from the Coronavirus are being actively managed and we currently do not foresee it having a material impact on the group,” Maltz said.

HomeChoice shares closed unchanged at R35.49 on the JSE yesterday.


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