Western Cape Business News

Send  Share  RSS  Twitter  22 Nov 2011

RETAILING: Cape Retail Niche Remains Healthy


Recent Western Cape Business News

THE Cape’s retail mainstay Pick n Pay may be struggling for traction but two city-based niche players, Holdsport and HomeChoice, are picking up speed.

Holdsport – which retails through Sportsmans Warehouse and Outdoor Warehouse – increased sales by 7% to R546 million in the half-year to end August and increased after tax profits by 20% to R61 million.

This is a pretty good result considering that Holdsport estimated price deflation of around 1.4% for the six month trading period. Management kept a lid on total trading expenses, which only increased 8.2%.

The Sportsmans Warehouse division – comprising 33 stores – saw sales up 6% to R392 million, while Outdoor Warehouse – comprising 18 stores - managed to push up revenue almost 8% to R132 million.

The most encouraging growth was not found in retail, but in specialist clothing manufacturer, First Ascent, which pumped revenue up 28% to R23 million.

Holdsport CEO Kevin Hodgson said the First Ascent brand continued to gain in popularity and was successfully extending its product range.

HomeChoice, a specialist catalogue retailer based in the southern suburbs, has also spun some strong profits. In the six months to end June HomeChoice increased sales by 28% to R400 million and kicked up operating profits an impressive 42% to R152 million as the group operating margin soared from 22% to 30%.

Like Holdsport, HomeChoice also saw extraordinary growth outside its traditional retail business with the company’s FinChoice financial services revenue increased by a whopping 60% to R85 million.

CEO Rick Garratt said that while HomeChoice only increased finance charges by 13.8% (due to the general decline in interest rates), FinChoice managed its large increase in line with its continued strong growth in loans disbursed.

The outlook for both Holdsport and HomeChoice look encouraging.

While Hodgson cautioned that second half trading depended heavily on Christmas trading, it is perhaps telling that Holdsport has signed lease agreements for another two stores and is evaluating other opportunities.

Hodgson noted: “The new stores that we opened are successful and have met our expectations. The weighted trading space for the full financial year is expected to increase by 3% on the previous year.”

Garratt said growth in demand for the HomeChoice’s loan products and merchandise remained good in the first six weeks after the close of the interim trading period.

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