Johannesburg - South African furniture retailer JD Group flagged a hefty full-year loss on Monday and said it had found a buyer for its financing unit, becoming the latest company to get hammered by exposure to the troubled consumer debt market.
JD Group, which is 86 percent owned by furniture manufacturer and retailer Steinhoff International, has been hit as low-income South Africans struggle to repay loans.
The central bank last month launched a R17 billion rescue of African Bank Investments after the consumer lender failed under a mountain of bad loans.
Like JD Group, African Bank was also involved in furniture retailing, selling sofas and dining sets on credit to low-income customers.
African Bank's furniture business is now undergoing “business rescue”; a restructuring that gives it temporary protection from creditors.
JD Group said in a statement it expected to report a headline loss of up to 570 cents a share for the year to end-June, from earnings of 395.2 cents a year earlier.
The company also said it had agreed to sell its finance arm to an international consumer finance group, but could not give the identity of the buyer until the deal was completed.
The sale will not include its insurance operations, JD Group said, adding the deal would reduce its funding requirements and improve its balance sheet.
Shares of JD Group finished up 0.5 percent at 22.45 rand before the announcement. - Reuters