Aggressive pricing at its Hi-Fi Corporation chain resulted in lower operating profit for the cash division, although sales grew during the second half of the year, says listed retailer JD Group.
JD Group sells furniture through outlets such as Morkels and Joshua Doore. It also owns Hi-Fi Corporation and Incredible Connection, through which it sells computing and related equipment.
The company reported sales up 3%, to R9.5 billion, in the year to August and said net profit leapt 535%, to R508 million. The company attributed the higher bottom line earnings to bedding down its new business model.
The cash retail division, which comprises Incredible Connection and Hi-Fi Corporation, saw total sales up 8% year-on-year, to R4.3 billion. However, cheaper imports and margin compression as Hi-Fi Corporation priced aggressively saw operating profit decline R28 million.
Sales at Hi-Fi Corporation grew 16% during the second half of the year as 13 of its 34 stores have now been revamped. The company says repositioning Hi-Fi Corporation is continuing to gain momentum and it has done “much work” on improving the merchandise range and brand positioning.
Incredible Connection, while continuing to trade well, battled to grow its top line as the stronger rand weighed on selling prices.
JD Group expects to benefit from festive season sales. Sales during the holiday period account for a large percentage of any retailer's earnings.
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