LEWIS, the JSE-listed focused company on selling household furniture, electrical appliances and home electronics in southern African countries, said yesterday that it generated R2 billion in merchandise sales for the six months ended September despite supply chain problems.
The merchandise sales were 20.7 percent higher than the previous period last year to R1.99 bn supported by high levels of stock availability during a period of significant supply chain challenges.
The group said credit sales grew by 24.4 percent and cash sales by 17.1 percent. Chief executive Johan Enslin said yesterday that the group’s stock level placed it in good stead for the Black Friday bonanza.
“We continued to pursue our strategy of increasing inventory levels to ensure adequate stock cover to meet customer demand and to counter the ongoing challenges in the supply chain. Our good stock position is a competitive advantage going into Black Friday and the festive season,” said Enslin.
Enslin said Lewis, whose brands include Lewis, Beares, UFO and Best Home and Electric, said the group had made good progress inroads in terms of diversification of the business model.
The sales split has gone from 35 cash and 65 percent credit sales in 2017 to credit sales, accounting for 50.6 percent of total merchandise sales at the end of September.
“Various acquisitions of brands like UFO and Beares have played a big role in lessening the group’s dependency on credit sales, and it has also given us reach to higher Living Standard Measure (LSM) groups. The group is well-positioned to both cash and credit sales amongst all LSM groups in South Africa,” said Enslin.
Sales in the stores outside South Africa, which represent 15.8 percent of the store base, increased by 17.5 percent and accounted for 18.3 percent of the group’s sales.
The group said highlights for the period were the 12 percent increase in total revenue compared to last year to R3.4 bn. Operating profit jumped 23.3 percent to R341 million as the debtors' book continued to improve, with collection rates strengthening to 78.7 percent from 66.5 percent in the prior period last year.
“The quality of the group’s debtors’ book has continued to improve, with collection rates strengthening, the percentage of satisfactory paid accounts increasing and debtor costs continuing to decline,” said the group. These factors, together with continued tight expense management, had contributed to the group’s operating profit increasing by 23.3 percent.
Headline earnings benefited from the aggressive share buy back programme and increased by 24.5 percent to R226 million, with headline earnings per share increasing 39.7 percent from a year ago to 330 cents.
Lewis shareholders will receive a R1.95 a share interim dividend, a 46 percent increase on R1.33 a share declared in the previous year. In rand terms the interim dividend is equivalent to the final dividend paid last year.
The group said of the KwaZulu-Natal civil unrest, 57 stores were damaged and looted, 51 of which had reopened, and the remaining six will reopen once the damages have been repaired.
BUSINESS REPORT ONLINE