Petcare retailer Greencross has forecast further sales and earnings growth in 2018 and is paying an unchanged final dividend of 9.5 cents a share, taking the full year payout to a steady 19 cents a share.
That was after lifting underlying net profit 7% to $42.9 million in 2017, underpinned what it says was solid growth in its pet stores and veterinary clinics despite a “downbeat’ consumer environment.
But the underlying net profit, which excluded the benefit of one-off tax losses, fell marginally short of consensus forecasts around $43.3 million. Bottom line profits, including one-off costs, rose 21.5% to $42.03 million.
Revenues also undershot market forecasts despite being up 11.4% to $817.5 million, thanks to 4.5% same-store sales growth and new Petbarn, City Farmers and Animates stores and Greencross Vet clinics.
Investors were unimpressed, sending the stock more than 6.7% to $5.72 at one stage as the greedy analysts and big investors gave it the thumbs down (despite the same store sales growth being better than most other retailers). In late trading the shares started recovering the earlier losses and finished the day off 2.7% at $5.96.
Retail same-store sales rose 4.4% (Petbarn), driven by strong demand for staples such as cat and dog food, while vet clinic revenues were up 4.8%.
Underlying EBITDA, excluding start-up losses from new stores, rose 9.3% to $104.2 million compared with market forecasts around $106 million.
Chief executive Martin Nicholas said the 2017 result had been achieved despite what he described as “downbeat” consumer sentiment and spending.
"It was a positive year in 2017, we made good progress and we have further to go as we refresh and improve our customer offering," Mr Nicholas told investors this morning.
And he says 2017-18 has started well, with total sales for the first seven weeks up 10% and same-store sales rising 4.9%.
"Greencross expects ongoing execution of its integrated pet care strategy will drive continued top and bottom line growth," Mr Nicholas said, adding that operating leverage would likely improve in the second half of 2018.
"Greencross will continue to invest in organic growth through the roll out of stores, in-store clinics and services and store refurbishment."
