Investment proposition
The group offers a compelling case for investors looking for exposure to the country’s retail sector with a focus on a high growth segment of the population.
Investors should consider the following features when evaluating a potential investment in the Lewis group:
- Clear strategic direction
- Focused on core business of furniture retailing
- Primary focus on high growth LSM 4 – 7 target market
- Lewis one of most recognisable furniture brands in SA
- Proven business model
- Integrated credit and marketing strategies
- Centralised credit approval and granting process
- Decentralised cash collection process
- Differentiated and exclusive merchandise ranges (refer to ‘customer-focused business model’.)
- Industry-leading credit management
- Credit offered across all brands
- Advanced application and behavioural risk scorecards
- High proportion of credit business
- Opportunity to sell insurance to credit customers
- Sustained financial performance
- Historically high operating margins
- Operating margin target of 26% by 2013
- Low cost structure
- Store-based customer focus
- Long-term personal relationships developed with customers
- 55% of business to existing customers through re-serve programme
- Store footprint
- National coverage of 548 stores
- Presence in all major metropolitan and rural areas
- Stores conveniently located for needs of target customers
- Targeting to open 150 stores in three to four years
- Experienced management team
- Strong blend of company and industry experience