By Mboniso Sigonyela
The latest Edgars consolidated store results could be the first indication that the cellular phone market, which has been a major revenue driver for retailers, has reached its peak. Edcon, the first retailer to stock cellphones, reports a 14% year-on-year decline in cellphone sales from its United retail chain.
United retail is the company focused on the lower-income earners within the restructured group. The group’s sterling performance in the previous financial year was mainly due to cellphone sales. The sales, with cost-cutting measures, boosted group earnings to a stunning 164% last year. This year Edcon reported a 34% earnings drop after issuing a profit warning.
The levelling sales will give group chief executive Steve Ross, who has agreed to add two years to his original five-year deal, something to worry about as cellphones are a significant source of revenue. They make up 10% of total turnover.
But the country’s biggest operator, Vodacom, says there is no decline yet. “There has been a 40% increase in activations from Edgars this year, says Vodacom’s Joan Joffe.