Nurek and the board weathered a storm last year when in June 2016 minority shareholder David Woollam took the Lewis board to court in a bid to declare them delinquent.
However, his court bid failed and the executives remained in their positions. Woollam’s case was dismissed by the High Court in Cape Town in October.
Woollam wanted chief executive Johan Enslin, chief financial officer Les Davies, independent non-executive chairperson David Nurek and independent non-executive director Hilton Saven declared delinquent.
With Nurek and Les Davies leaving, the group was quick to make appointments to fill the vacant posts. Jacques Bestbier will replace Davies as chief financial officer with effect from June 1, while Nurek will serve as a director until a suitable candidate has been appointed to the board. Hilton Saven will take over from Nurek. The group also boosted its board with new members Daphne Motsepe and Adheera Bodasing, who have been appointed as non-executive directors also with effect from June 1.
The group is going through these challenges while facing difficult trading conditions. The affordability regulations put in place by the National Credit Regulator (NCR) in 2016 has put pressure on the business and the consumer. The situation is made worse by a high unemployment rate, low economic growth and drought.
Chief executive Johan Enslin said with the consumer taking strain because of these factors, the affordability assessment regulations were the last thing the industry needed. In 2016 the NCR issued affordability regulations requiring customers to provide their three latest salary advices or bank statements when applying for credit.
“The affordability assessment made it difficult for some of our customers to get credit and that also affected self-employed customers. This meant a large number of our customers didn’t qualify to get credit,” said Enslin.
Lewis said the regulations were not only restricting access to credit, but limited the group’s credit sales growth.
Presenting the results for the year to end March, the group said after increasing by 1 percent in the first half of the reporting year, merchandise sales slowed in the second half and ended the year 2 percent lower as compared to 2016, with like-for-like merchandise sales declining by 9percent.
The revenue was down by 3.3 percent to R5.6 billion. The gross profit margin expanded by 360 basis points to 41.6 percent due to more competitive procurement of locally sourced product, tight stock control and an increased sales contribution from the higher margin furniture category. Lewis is trading out of 761 stores across its three retail brands.
Headline earnings declined from R552 million to R355 million, with headline earnings per share 35.6 percent lower at 400.1 cents. But the group said it remained strongly cash-generative. Cash generated from operating and investing activities was used to repay borrowings of R1 billion and to fund dividend payments of R357 million.
Lewis directors declared a final dividend of 100c per share, bringing the total dividend for the year to 200c per share.