JSE-listed JD Group's investment in Incredible Connection is paying dividends.
In its results for the year ended August, it said: "The acquisition of Incredible Connection has certainly lived up to expectations. This business enjoys a unique position in its marketplace, which is being managed by a very dedicated and energetic young team."
During the year, 37 Incredible Connection stores were acquired, 182 stores were renovated, five stores were closed and 33 stores opened, taking the total store base to 1 028.
The group reported a 20% increase in revenue, to R11.9 billion, and said operating profit had moved up 15%, to R2 billion. Stripping out the inclusion of Incredible Connection, the revenue grew 10%.
Headline earnings increased 21%, to R1.5 billion, and headline earnings per share increased 18%, to 823.5c.
JD, which acquired the Connection Group on 1 December last year, said it had included nine months of this group's results. The Connection Group houses entities such as Incredible Connection.
Slow down
In the company's commentary on the full year it said that, while its interim results indicated "healthy top line growth matched by unprecedented collection rates across all the chains," this was not the picture by the end of the full-year.
"A very different picture emerged towards the end of the first quarter of 2006. Up until then, achieving and exceeding budgeted top line was taken as a given. Since March 2006, achieving budgeted sales has become more difficult."
However, the company says this must be seen in light of the fact that it has not compromised its "credit-granting criteria in order to stimulate top line sales". In addition, collections "began to level off from the previously unprecedented high levels".
The company added that its "determination to enhance the brand equity of Hi-Fi Corporation" has impacted on the top line and product margin. "A large investment was made on infrastructure to provide the end-consumer with an improved shopping experience."
The company added it had improved quality checks before purchasing certain lines. "We are satisfied that what has been initiated now enables the Hi-Fi chain to move ahead and to continue with the expansion of its store base."
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