Lewis Group Ltd., a South African furniture and household goods retailer.Photo :Simphiwe Mbokazi
Lewis Group Ltd., a South African furniture and household goods retailer.Photo :Simphiwe Mbokazi

Lewis Group plans 20 new stores, pays dividend

By Dineo Faku Time of article published May 28, 2021

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JOHANNESBURG - SOUTH Africa’s single-largest furniture retailer, Lewis Group, said yesterday it planned to open up to 20 new stores, mainly in its Beares and UFO store chains, as it rewarded its shareholders with a handsome total dividend during the year to the end of March.

Lewis, which sells household furniture, electric appliances and home electronics, declared a total dividend of 328 cents a share, up 77.3 percent compared to a year ago, on a robust balance sheet and strong cash generation.

Headline earnings per share increased to 616.5c in the year to the end of March, up from 260.2c in the prior year. The company said its balance sheet remained robust, with no borrowings, while cash generated from operations jumped by 46.8 percent to R915 million.

Chief executive Johan Enslin said the growth in operating profit of 174.2 percent was driven by buoyant merchandise sales, which recovered strongly following the lockdown, together with the improving quality of the debtors’ book and tight cost management.

Enslin told shareholders that during the year under review, its store base had increased by 13 to 807, and it had opened 24 new stores, while 11 had been shut.

“The group plans to open 15 to 20 stores in the new financial year, mainly in the Beares and UFO chains,” said Enslin.

The year under review was a tale of two halves, with merchandise sales declining by 4.9 percent in the first half, followed by growth of 17 percent in the second half, to post an annual increase of 6.7 percent to R3.9 billion.

The group said sales had increased by 18.2 percent during the year under review, excluding the R360m that was lost due to the stringent lockdown regulations in April and May.

Enslin said the sales growth was thanks to the 25.9 percent jump in cash sales, while credit sales took a 7.9 percent knock as a result of stringent trade restrictions to curb the spread of the Covid-19 pandemic, resulting in the contribution of cash sales to merchandise numbers increasing to 50.9 percent, up from 43.1 percent a year earlier.

“The group took a strategic decision not to cancel any merchandise orders when the country went into lockdown, which ensured that stores were well stocked to meet post lockdown demand,” he said.

Enslin said the group had seen second-half sales strength continue into the new year, supported by good stock availability.

Lewis, however, expected that its customers would be financially constrained in the months ahead because of the third wave of the Covid-19 pandemic.

“The potential impact of a third wave of Covid-19 infections, together with Covid relief grants being discontinued, could result in further pressure on the group’s customer base,” said Enslin.

Lewis shares closed 2.68 percent higher at R34.50 on the JSE yesterday.

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