Lewis Group surged more than 12 percent on the JSE on Wednesday after the multi-brand furniture and appliances retailer defied constrained consumer spending with double-digit growth in the six months to end September on the performance of its United Furniture Outlets (UFO) subsidiary. Photo: David Ritchie/African News Agency (ANA)

DURBAN – Lewis Group surged more than 12 percent on the JSE on Wednesday after the multi-brand furniture and appliances retailer defied constrained consumer spending with double-digit growth in the six months to end September on the performance of its United Furniture Outlets (UFO) subsidiary.   

Lewis said sales in UFO – which it acquired for R320 million in 2017 – rose 8.8 percent, pushing up its overall headline earnings per share by 18.9 percent to 215 cents a share during the period. 

The group said merchandise sales shot up 6.4 percent to R1.7 billion. It said traditional retail brands Lewis, Best Home and Electric and Beares grew sales by 3.7 percent.

Chief executive Johan Enslin said the performance was an indication that the group’s strategy of diversifying across market segments and retail channels continues to gain traction.

“The credit health of the group’s customer base continued to improve, despite the weak consumer credit environment,” Enslin said. “Credit collection rates improved from 77.2 percent to 79.6 percent, which contributed to debtor costs declining by 0.4 percent.” 

During the comparative period last year, UFO pushed Lewis total merchandise sales by 25.9 percent to R1.6bn.

Yesterday, the group said its headline earnings during the first six months of the year increased by 14.4 percent to R171m, while revenue rose by 6 percent to R3.1bn. It said gross profit margin improved by 40 basis points to 40.3 percent following the launch of new merchandise ranges.

The group declared an interim dividend of 120c a share from 14.3 percent last year. 

INspire, the omni-channel home shopping retailer launched in 2018, generated sales of R35.7m during the period. 

The group said credit sales increased by 8.1 percent, benefiting from the change in the National Credit Act’s affordability assessment regulations, and cash sales grew by 4.1 percent.

Enslin said the credit health of the group’s customer base continued to improve despite the weak consumer credit environment. 

The group increased its store base to 787 outlets after opening nine stores and closing six during the period. Lewis has 121 stores operating outside of South Africa that account for 17.3 percent of total sales. The group plans to open a net of six new stores in the second half of the year.

Enslin said the group’s diversification strategy across target markets and sales channels would continue to offer resilience in the weak consumer spending environment.

“Marketing activity is being accelerated to drive sales growth, with all the group’s brands participating in Black Friday on November 29. We are also planning for robust festive season trading which will be supported by strong promotional campaigns and new merchandise ranges,” he said.

Lewis shares closed 12.27 percent higher at R34.22 on the JSE on Wednesday.

LEWIS Group increased its store base to 787 outlets after opening nine stores and closing six in the six months to the end of September. Lewis has 121 stores operating outside of South Africa that account for 17.3 percent of sales.  |  Leon Nicholas African News Agency (ANA)