November 20, 2019
Cape Town – Lewis Group increased headline earnings per share by 18.9% to 215 cents in the six months to September 2019 as the multi-brand furniture retailer delivered solid revenue growth, improved margins, reduced debtor costs and increased profitability in a deteriorating retail trading environment.
The group increased its interim dividend by 14.3% to 120 cents.
Chief executive officer Johan Enslin said the group’s strategy of diversifying across market segments and retail channels continues to gain traction.
Merchandise sales grew by 6.4% to R1.7 billion, with UFO sales up 8.8% and the traditional retail brands Lewis, Best Home and Electric, and Beares growing sales by 3.7%.
INspire, the omni-channel home shopping retailer launched in 2018, generated sales of R35.7 million for the six-month period.
Credit sales increased by 8.1%, benefiting from the change in the National Credit Act’s affordability assessment regulations, and cash sales grew by 4.1%.
The gross profit margin improved by 40 basis points to 40.3% following the launch of new merchandise ranges.
Operating profit increased by 8.9% to R211 million and the group’s operating margin expanded by 10 basis points to 6.8%.
The group’s balance sheet remains ungeared and the group has no borrowings.
Enslin said the credit health of the group’s customer base continued to improve, despite the weak consumer credit environment. Credit collection rates improved from 77.2% to 79.6% which contributed to debtor costs declining by 0.4%. He noted that the level of satisfactory paid customers at 74.2% is at its highest level since September 2008.
The group’s store base increased to 787 as 9 stores were opened and 6 closed. This includes 121 stores outside South Africa which accounted for 17.3% of total sales. The group plans to open a net 6 new stores in the second half of the year.
Discussing the outlook for the remainder of the financial year, Enslin said the group’s diversification strategy across target markets and sales channels will continue to offer resilience in the weak consumer spending environment.
He said marketing activity is being accelerated to drive sales growth, with all the group’s brands participating in Black Friday on 29 November. “We are also planning for robust festive season trading which will be supported by strong promotional campaigns and new merchandise ranges,” he added.
Issued by Tier 1 Investor Relations on behalf of Lewis Group
Enquiries: Graeme Lillie 082 468 1507