VETERINARY services provider Greencross Limited (ASX: GXL) has reported an increase in profit of 21.5 per cent to $42 million, as its strategy of moving its vet clinics inside its petcare stores starts to pay off.
Greencross, the parent company of Petbarn, City Farmers, Animates, and Greencross Vets, posted results for the 53 weeks to 2 July and the 21.5 per cent profit rise is measured against a 52-week 2016FY.
Greencross CEO, Martin Nicholas (pictured), says the results were achieved against a backdrop of negative consumer confidence which had hit other retailers.
"FY2017 was a pleasing year of growth against a downbeat consumer backdrop," says Nicholas.
"We have made good progress in rolling out our convenient integrated pet care offering and are committed to rewarding our customers' loyalty."
A key highlight for Greencross was the expansion of the company's store and clinic network to more than 400 locations, with its vet clinics now in 37 locations.
The company's revenue increased by 11.4 per cent during the financial year to $817.5 million, which Nicholas says was driven for the first time in part by customers.
"Twenty-six per cent of our revenue now comes from pet owners shopping across our multiple offerings be it retail, grooming or vet," says Nicholas.
"They come more often and spend more.
"In terms of opportunity they make up 11 per cent of our customer base and we have plenty of scope to increase this via our group loyalty initiatives and further rollout of in-store clinics and other pet services."
Sales growth drove a 15 per cent increase in the group's EBITDA to $100 million for FY17, with EBITDA cash flow conversion sitting at 96 per cent reflecting a well-controlled inventory.
While Australian retail remains the group's bedrock in terms of where their revenue comes from, the group's operations in New Zealand were the strongest performer by growth with sales revenue in the region coming in at $98 million, representing growth of 21 per cent.
These New Zealand figures were driven by network expansion in the region, with seven stores and eight clinics opened over the past 12 months.
Greencross added 18 stores in FY2017, bringing the total network to 239 stores. In addition, the company added 21 general practice clinics and four specialist and emergency practices to the network in 2017.
Nicholas says FY18 will only bring more growth for the company.
"After another strong year of network expansion in FY2017, we remain confident in our network runway and the continued growth of the ANZ petcare market," says Nicholas.
"In FY2018 we are targeting to begin the refurbishment of our fleet, open new stores and add 20 in-store clinics to the network."
The directors of Greencross have declared a fully franked final dividend of 9.5 cents per share, which represents a dividend payout ratio of approximately 50 per cent.
At around 1.40pm (AEST) Greencross shares (ASX: GXL) are trading down 6 per cent to $5.73.
Business News Australia
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