Johannesburg - Lewis’s shares tumbled on Friday, losing about 8.43 percent in early trade to R38.14 per share after the furniture company released a disappointing trading update for the six months to end September.
The furniture retailer warned its shareholders that it expected its interim headline earnings to fall by up to 45 percent for the period. The company blamed the National Credit Regulator’s (NCR) affordability assessment guidelines and the tough economic environment faced by consumers for the decline.
It said headline earnings per share for the period were expected to be between 210 cents and 177c per share, between 35 percent and 45 percent, lower than the 322.6c recorded during the corresponding prior period.
Earnings per share were expected to be between 218c and 185c per share, between 35 percent and 45 percent, lower than the 335.5c for the corresponding prior period.
“The performance reflects the challenging economic and consumer environment in which the business is trading and how these conditions have impacted the group’s lower to middle income target customers. This has been compounded by the ongoing impact of the NCR’s affordability assessment guidelines which are restricting access to credit in South Africa and severely limiting the group’s credit sales,” the group added.
In favour
In the annual general meeting on Friday, the 76.2 percent of the shareholders voted in favour of the company’s remuneration policy, which was opposed by 40 percent in 2015.
On Friday, only 23.2 percent of the shareholders voted against the policy. The company would not disclose details of the remuneration when contacted by Business Report.
Meanwhile, Lewis said merchandise sales for the period were in line with last year, with like-for-like merchandise sales were down 9.2 percent.
“Revenue declined by 2 percent, mainly as a result of a 4 percent decline in other revenue over the corresponding prior period. The group’s gross profit margin has continued to expand in line with management’s expectations and improved to 40.5 percent compared to 36.4 percent in the previous year.
“Debtor costs for the period increased by 7.3 percent reflecting a further slowing from the 17 percent growth reported at the 2016 year end,” it said.
The year has not been good for the company. In June Dave Woollam, a minority shareholder in the company, asked the Western Cape High Court to declare Lewis chief executive Johan Enslin; chief financial officer Les Davies; independent non-executive chairman David Nurek; and independent non-executive director Hilton Saven incompetent.
In mid-October the High Court dismissed Dave Woollam’s case, describing it as vexatious and without merit.
Lewis shares rose 0.36 percent on the JSE on Friday to close at R41.80.
BUSINESS REPORT