May 23, 2013
Furniture and appliances retailer Lewis Group reported a 13.6% rise in headline earnings per share for the year ended March, “which speaks to the fact that our business model is a resilient one”, according to CE Johan Enslin.
Mr Enslin said that amid challenging trading conditions “this is a solid set of results”.
A final dividend of 302c per share was declared, bringing the total dividend to 514c, an increase of 16.3%. Lewis Group’s share price rallied 13.44% to close at R59 on Wednesday after the results were released.
Earlier in the week, African Bank Investments Limited’s (Abil’s) retail division, Ellerine Holdings, reported a less positive set of results for the six months ended March.
Abil’s retail unit saw an 11% decline in sales over the period, leading to a fall in headline earnings from R191m in the prior comparable period to R18m.
Mr Enslin said Lewis Group’s decentralised collection model was a resilient one, which had underpinned the group’s performance. Lewis does not have call centres; each store has a team, employed from the local community, “responsible for collecting the book”.
When a customer defaulted, the team members were fully trained and could address the customer in their home language, he said. “We are pleased with the 6.8% increase in our revenue line. Our operating margin has expanded from 23.5% to 24% …. Costs were also well contained through the year.”
While trading conditions were expected to “continue to be difficult”, with high inflation and a weak job market, “we believe we are in a position to … bring exclusive furniture to the market — and these are furniture lines that speak to the tastes of credit customers”.
“We also believe that through our business model … we are strongly positioned to fight for the business that is available out there,” he said.
Credit sales increased from 71% to 75% of total sales, which was above the 70% target.
This also indicated that the 71 stores the group had opened over the past three years were “in the right locations where credit customers shop”. The Lewis Group had opened 24 stores over the period, 12 of which were Lewis outlets. Lewis stores are being rolled out in a smaller format, at almost half the size as they were a few years ago.
The group planned to open 20 to 25 outlets this year.
