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Lewis beats challenging headwinds to post solid annual performance

Lewis Group, which owns brands such as Lewis, Best Home, and Electric, Beares, and United Furniture Outlets, yesterday delivered a solid performance for the year ended March 31, 2022, image: Simphiwe Mbokazi

Lewis Group, which owns brands such as Lewis, Best Home, and Electric, Beares, and United Furniture Outlets, yesterday delivered a solid performance for the year ended March 31, 2022, image: Simphiwe Mbokazi

Published May 27, 2022

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Lewis Group, which owns brands such as Lewis, Best Home & Electric, Beares, and United Furniture Outlets, yesterday delivered a solid performance for the year ended March 31, 2022, despite the impact of the tightening domestic economy, the July 2021 civil unrest as well as local and international supply chain challenges.

By 4.50pm its share price was up 4.54 percent at R52.27, having climbed 51.52 percent in five years.

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Its headline earnings per share increased by 37.7 percent to 849 cents, while the firm also declared a final dividend of 218 cents per share.

Merchandise sales increased by 11.5 percent to R4.4 billion, supported by strong sales during the Black Friday promotions and high levels of stock availability during a period of significant supply chain disruption, the group said.

Sales in the second and third quarters of the year were impacted by the civil unrest in KwaZulu-Natal and parts of Gauteng, however, in the fourth quarter to March 2022 the group posted sales growth of 7.1 percent, driven by the traditional retail brands.

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Lewis said 52 of its 57 stores that were damaged in the unrest, reopened during the year, and the last five stores are trading from temporary premises while repairs take place. Its insurance claim for the damage amounted to about R78.8 million.

Debt collection rates grew to 99 percent from 71.8 percent in 2021, and the satisfactory paid accounts increased from 74.4 percent to 79 percent. Debtor costs declined by 13.6 percent.

In an interview, chief executive Johan Enslin said the highlights of the results for the group was that it received a collection rate of 79 percent.

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“This is the highest collection rate that we have reported, and that takes us back to 2004,” Enslin said, adding that the good collection rate was boosted by a large proportion of Lewis’ satisfactory paying customers.

Enslin said Lewis' balance sheet was in great shape. The retailer’s credit sales also had a boost, growing by 16.7 percent, while cash sales increased by 6.4 percent. The group also generated R863m in cash.

“At the end of the year, you will see that there was a very low level of borrowings at R81 million. Lewis has got absolutely no borrowings and we’ve got cash in the bank. And we’ve also got some credit facilities available should it become necessary to draw on those,” he said.

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Sales in the group’s 129 stores outside South Africa increased by 11.9 percent and accounted for 17.9 percent of total sales. The retailer’s store footprint increased to 819 after it opened 12 new stores across all brands during the year.

“The strong operating performance from the Lewis, Best Home and Electric, and Beares brands was adversely impacted by impairment charges totalling R131 million,” Lewis said.

Operating profit before impairments and capital items increased by 4.3 percent to R767m.

Looking forward, Enslin said the current challenging retail trading conditions were expected to persist in the short- to medium-term.

“There is increasing pressure on disposable income with rising interest rates, transport costs, energy, and food prices while the ongoing load shedding is disrupting trade and impacting sales patterns.

“In this constrained environment we plan to increase market share through innovative marketing strategies which will be supported by new merchandise ranges across all of our brands and high levels of stock availability,” he said.

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