DURBAN – The Lewis Group’s shares surged more than 8 percent on the JSE on Tuesday after the household and electrical appliances retailer declared a cash dividend of 65 cents a share for the year to the end of March, taking its total dividend to 185c despite the impact of Covid-19 on its operations.
The group said Covid-19 adjustments reduced profit before taxation by R339 million and headline earnings by R224m.
“This includes an increase in the debtors impairment provision of R123m as a result of lost collections in March, due to store closures during lockdown, a further increase of R190m in the debtors impairment provision for the potential economic disruption of Covid-19 and its impact on future customer account payments, and an impairment charge of R27m for the possible future impact of Covid-19 in terms of the IFRS 16 lease accounting standard,” the group said.
The group blamed the national lockdown for its 30.8 percent decline in headline earnings per share to 260c a share.
Chief executive Johan Enslin said, however, that the group’s business model proved resilient during the lockdown trading restrictions.
“The strength of our balance sheet and cash position ensured that we did not need to access any bank funding during the lockdown period despite all our stores being closed for an extended period,” Enslin said.
The group increased its merchandise sales by 6.9 percent for the first 11 months of the year but lost crucial trading days at the start of the lockdown on March 27.
Sales for March were 24.8 percent lower compared with a year earlier. “This resulted in losing merchandise sales of approximately R80m and customer account collections of R180m,” Lewis said. “As a result, merchandise sales growth for the 12 months slowed to 4.7 percent.”
Sales at the group’s Lewis, Best Home and Electric, and Beares stores increased 3.2 percent, with stores outside South Africa accounting for 18 percent of sales.
INspire, the omni-channel home shopping business, grew its sales 65.1 percent to R44.8m.
United Furniture Outlets increased merchandise 10.8 percent to R530m.
Total revenue, consisting of merchandise sales and other revenue, rose 5.2 percent to R6.5bn.
Lewis increased its store footprint to 794 after opening 19 stores and closing nine stores. The group plans to open 20 new stores in the 2021 financial year.
Enslin said sales strengthened by 2.3 percent following the reopening of stores from the beginning of June, when the country moved to lockdown level 3, and by 16.8 percent in July.
Lewis shares closed 12.54 percent higher at R14 on the JSE on Tuesday.
BUSINESS REPORT