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Thu 24 May 2007
Close: 4 589c 
Day's move: 0c (0.00%)
Volume: 0
Trades: 0
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The retail sector benefit from strong consumer spending during the six months to 30 September 2006. Consumer confidence had declined marginally, but persisted at a level close to record highs. Statistics revealed that national clothing, footwear and textile sales increased by 13.6% in the six months under review. The group's sales during the period increased by 13% overall to R8 302m (Sept 05: R7 350m). The trading profit increased by 17% to R911m (Sept 05: R780m), despite the growth in retail space. Other key performance indicators include the gross profit margin improving from 38.1% to 38.6%; stockturn up from 5.9 to 6.0 times; operating margins improving to 11.5% against the previous year's 11.3%. Diluted headline earnings per share increased by 20% to 131cps (Sept 05: 109cps)
Dividends
An interim dividend of 71c per ordinary share was declared.
Prospects
During August 2006, Edcon announced plans to sell 51% of its manufacturing operation to a consortium of management and staff. Consultation with all affected stakeholders is in progress, with the effective finalisation date expected in the second half of the financial year. Consumer spending power and disposable incomes remain buoyant, despite the tightening of interest rates. Although the pace of growth in spending is moderating, new job creation and real wage increases provide a strong underpin to retail spending activity. During the period under review, the Department of Trade and Industry announced quotas on certain categories of clothing imports from China in an effort to re-activate local manufacture. Edcon, like other retailers, is currently engaged in sourcing forward orders to ensure minimum disruption to the supply chain, and to protect the interests of Edcon's customers, employees and shareholders. Robust consumer confidence combined with the group's merchandising strengths, astute financial management and market leadership put it in a strong position to continue to deliver further meaningful value to shareholders for the year as a whole. The board remains confident that the achievements of the first six months will continue for the remainder of the current financial year.
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