Stores in existence since the beginning of July 2005 (existing stores) accounted for 10% of the increase in revenue with the remaining 12% increase due to the 27 new stores the company has opened since July 2005. The increase for the period has been achieved on the back of steady positive revenue growth in both quarters of this half-year. The strategic initiatives put in place to address revenue growth as well as focus on pricing, contributed to this good performance. Gross profit margins for the half-year were lower in percentage terms due to the occurrence of certain once-off costs as well as slightly lower trading margins, but in terms of rand value, grew by a very healthy 15%. Operational expenses for the period were well controlled with existing stores increasing by 1%. New stores contributed 10%, the total increase for the period being 11%. The biggest saving resulted from the non-recurrence of certain once- off costs, e.g. brand advertising and the focus on managing the free customer delivery costs without compromising service levels. Revenue for the period increased by 22% whilst both operating profit and bottom line profits for the period improved by 29%. Earnings per share increased by 34% with headline earnings per share increasing by 35%. Net asset value per share has increased by 31%, from 906 cents (December 2005) to 1,188 cents. Cash and cash equivalents improved by 28%.
Dividend
The board has declared an interim dividend of 79cps (58cps).
Prospects
Management is confident about the trading prospects for the remainder of the financial year as consumer demand remains at healthy levels. The first nine trading weeks after half year-end have reported an increase in revenue in the region of 30% on that of the comparable 9 weeks.
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