The Greencross Limited (ASX: GXL) share price has remained flat at $6.13 in early trade following the release of the integrated pet care company's full-year results.
Key takeaways from the release include:
- Revenue up 11% to $817 million.
- Like-for-like sales growth (52-week basis) of 4.5%.
- EBITDA up 15% to $100 million.
- NPAT up 21% to $42 million (Underlying NPAT which excludes tax loss benefits was up 7% to $43 million).
- Earnings per share up 19% to 36.2 cents.
- Annual fully franked dividend of 19 cents per share.
- Strong start to FY 2018 with sales up 10% during the first seven weeks.
Although Greencross' top line received a boost from an extra trading week due to FY 2017 being a 53-week period, strong like-for-like (LFL) sales growth across the business also played a key role in the company's solid result.
The company's Retail segment achieved LFL sales growth of 4.4% thanks partly to strong sales of dog food and cat food. These two core product categories saw a 7.4% and 7% lift in sales, respectively.
The Australian Veterinary segment delivered 4.8% LFL sales growth. A key driver of this growth was the performance of its speciality and emergency hospitals and the start-up in-store clinics.
These in-store clinics have outperformed management's expectations thus far and can now be found in 37 retail stores. This is more than double the footprint the clinics had this time last year and looks likely to grow further in FY 2018 as the company reduces its focus on growth through acquisition.
Elsewhere, its New Zealand business posted a 4.9% lift in LFL sales and its online retail business performed well following the launch of its click and collect service. Online sales rose 55% during the period, but still has significant room for growth in the future according to management.
Finally, the first seven weeks of FY 2018 have started strongly and the company has delivered top line growth of 10% and company-wide LFL sales growth of 4.9%.
Should you invest?
I think this was a strong result from Greencross and was pleased with its LFL growth in such a tough retail environment.
Although it is still early days, I have been impressed with the solid start to the new financial year and feel confident the company is on course to outperform once again.
Especially as it invests in both organic and inorganic growth this year. Management advised that it plans to add a further 20 in-store clinics to its network and is in advanced discussions in regards to a number of vet acquisitions.
So with its shares changing hands at approximately 17x earnings and providing a trailing 3.1% dividend, I think Greencross is one of the best options in the retail industry alongside the likes of Premier Investments Limited (ASX: PMV) and Super Retail Group Ltd (ASX: SUL).
