November 8, 2010
Cape Town – Furniture retailer Lewis Group increased headline earnings per share by 14.5% to 332.5 cents in the six months to September 2010 as merchandise sales grew by 11.2% and credit collections continued to improve.
An interim dividend of 156 cents per share was declared, an increase of 8.3%.
Chief executive, Johan Enslin, said the stronger sales growth was driven by the steadily improving financial state of consumers in the Lewis target market and the focus on sourcing exclusive merchandise ranges.
Merchandise sales in Lewis, which account for 83% of total sales, increased by 11.2% with Best Home and Electric sales growing by 16.3%. Credit sales increased from 68.5% to 71.7% of total sales through targeted customer promotions at store level and the launch of new furniture and appliance ranges.
Enslin said the strategy of sourcing exclusive merchandise continued to benefit the group. Gross margin, adjusted for currency losses, improved from 33.4% at the financial year end in March 2010 to 34.4%.
Debtor costs for the period reduced from 5.0% to 4.8% of net debtors.
Operating profit margin improved to 22.0% (2009: 21.8%) and translated into operating profit growth of 10.5%.
Eleven Lewis and nine Best Home and Electric stores were opened in the past six months, bringing the store base to 565. Eight of the new Lewis outlets are the smaller format stores. The group plans to open 40 to 45 new stores for the 2011 financial year.
A new trading brand, My Home, was successfully launched during June 2010. Thirteen Lifestyle Living stores were relaunched as My Home and the first new store opened in August. Trading for the first three months has been in line with expectations, he said.
Discussing the group’s prospects, Enslin said the outlook for consumers continues to improve. “Higher real wage increases granted across most sectors of the economy are positive while retrenchments and job losses in our customer base appear to have stabilised.
“The momentum in collections has been encouraging and our store expansion plan is on track. The festive season trading period will again be strongly supported by merchandise and promotional activity,” he added.
Issued by Tier 1 Investor Relations on behalf of Lewis Group
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