Lewis Group, releasing its annual results, said yesterday that its performance reflected the state of consumers in South Africa’s high inflationary environment, where its customers opted to shop on credit instead of cash.
In its results for the year ended March 31, 2023, the group, which owns brands such as UFO, Beares, Best Home & Electric, said credit sales continued to be robust in the current environment and grew by 18.1%, while cash sales declined by 16.3%.
Headline earnings per share increased by 1% to 857 cents, while sales in its Lewis, Beares, and Best Home & Electric brands increased by 3.5%, and its cash retailer UFO reported a decline of 12.5%.
Lewis showed its confidence in the group’s cash-generating capability and maintained the total dividend for the year at 413c per share.
The group said the highlight of the results was the quality and performance of the group’s debtors’ book.
Lewis CEO Johan Enslin said: “Despite the weak consumer economy, the debtors’ book has shown good growth, collection rates have strengthened, and the percentage of satisfactory paid accounts increased to a record level, resulting in the reduction of the debtors’ impairment provision.”
Lewis said it proved its resilience with credit sales continuing to grow strongly across the traditional retail brands of Lewis, Beares, and Best Home & Electric. Cash sales slowed further which adversely impacted the performance of the cash retail brand, UFO.
The group flagged that total merchandise sales grew by 1.4% to R4.4 billion, while total revenue increased by 3.1% to R7.5bn.
“Operating profit before impairments and capital items declined by 8.3% to R702.8 million. The slower trading in UFO resulted in an impairment of R91.1m being recognised against its goodwill,” it said.
Looking ahead, Enslin said he believed the South African economy would continue to go backwards.
“I don't think any of us will be surprised if 2023 actually pans out as a year of zero economic growth. Our business has actually planned for that. We believe that we’ve got the great strategies in place to continue to gain market share and they are very well thought out and actually tested operational strategies,” he said.
The ongoing issue of load shedding continued to impact trade, causing disruptions in sales patterns.
“The group has proven its resilience through previous economic downturns, and management is confident in the group’s medium-term prospects,” it said.
In afternoon trade, the share price was up 1.78% at R40.
BUSINESS REPORT