Blue Label Joint CEO Brett Levy
JSE-listed Blue Label’s retail ambitions were coming to fruition as the group rolled out hundreds of standalone front-end retail stores in a 51:49 joint venture with Edcon Group.
The R300-million project would see 400 ‘Edgars Connect’ stores, offering a range of telephony products opened within the next 24 months, with 100 expected to be operating by the end of the year.
This formed part of Blue Label’s six-year-old back-end to front-end ambition of entering the retail sector and establishing a direct supply link to the consumer, Blue Label joint CEO Brett Levy said at the group’s financial results presentation on Wednesday.
Around 22 of the ‘new concept’ stores had already been established countrywide to provide an end-to-end solution for the connection of Sim cards, with 46 stores expected to be operational by the end of September.
The stores, which would sell the Sim cards of mobile operators Vodacom, MTN, Cell C and Telkom, would offer “anything” that could be connected by a Sim card, including action cameras and drones, in addition to the standard cellular and tablet products, and any related value-added services.
“This will create an ideal platform for Blue Label to implement its strategy of marketing its products and services on a retail basis,” he said.
The move followed Blue Label’s R314-million acquisition last year of Retail Mobile Credit Specialists (RMCS), which was subsequently merged with Blue Label’s The Postpaid Company to form Blue Label Connect on June 1 this year.
RMCS, which had about 500 customers – including an exclusive contract with Edcon – supplied telecommunications products and services, content, data and allied activities through both physical and virtual mediums.
Blue Label was now replicating its retail strategy in partnership with a number of undisclosed well-known retail chains – a strategy Levy believed would add momentum to the company’s current upward growth trend.
Blue Label on Wednesday posted double-digit growth across the board for the financial year to May 31, with headline earnings boosted by organic growth in the South African distribution segment, as well as its RMCS and Viamedia acquisitions.
The group’s headline earnings per share (HEPS) jumped 21% during the 12 months to May to 82.26c, despite the R89-million in losses incurred from its Mexico operations having negatively impacted HEPS by 12.82c.
Core earnings a share increased 29% to 89.71c, while earnings before interest, taxes, depreciation and amortisation surged 37% to R1-billion in the financial year under review.
Revenue ticked up 14% to R22-billion, while Blue Label’s gross profit increased 22% to R1.64-billion and gross profit margins rose from 6.96% to 7.46%.
Blue Label declared a dividend of 31c a share for the year.