Lewis chief executive Johan Enslin said the favourable outcome of the industry’s challenge against the regulations had given the group hopes that it could lift its credit sales.
Enslin said Lewis wanted to push its customers that were affected by affordability assessments back to levels it had before the regulations were enacted.
He said Lewis would continue to extend credit in a responsible manner. “We used to have about 8percent of the customers who fell under this category of self-employed and with the introduction of affordability assessment the figure dropped to 4percent, and this affected our sales in last year’s results,” Enslin said.
The affordability assessment required potential customers to bring their three latest payslips or three latest bank statements before they were granted credit in stores.
Enslin said the group would target self-employed and informally employed customers to boost its base.
Lewis is a leading credit retailer of household furniture and electrical appliances. The group operates Lewis, Best Home and Electric and, more recently, Beares.
In the year to end-March, Lewis increased its merchandise sales 9.96percent to R2.87billion, up from R2.61bn a year ago.
Like-for-like store sales rose 10.1percent, lifted by the inclusion of the recently acquired United Furniture Outlets (UFO) chain, which it acquired last October for R320million.
“The integration of UFO has been successfully completed,” said Enslin. “UFO allows the business to access higher income customers while increasing our cash-to-credit sales mix. We believe UFO is scalable with the potential to expand across South Africa and into neighbouring countries and five to 10 new stores are planned for the year ahead.”
Enslin said the group had continued its recovery with stronger merchandise sales, tight expense control and lower debtor costs, supported by a strong cash position and ungeared balance sheet during the period.
Enslin said the group remained highly cash-generative with R580m in cash on hand after paying for UFO and undertaking share repurchases.
“In the past 18 months, borrowings of R1.5bn have been repaid, resulting in the balance sheet being ungeared at year-end,” he said.
Headline earnings declined 26.5percent to R261m with headline earnings per share declining by 24.3percent to 302.6cents a share.
The group declared a total dividend of 200c a share.
Stores outside South Africa contributed 22.5percent of total merchandise sales, while credit sales rose 10.7percent and cash sales 8.2percent, with group credit sales accounting for 65.7percent of total sales.
The group’s store network increased to 773 at the end of the year following the acquisition of 31 UFO stores, but it closed 19 stores across the Lewis and Beares brands.
The group has also entered the home shopping market with the launch of Inspire, an omni-channel retail offering to be marketed through outbound call centres, agents and online shopping.
“Our strategy is to attract customers in the LSM 4 to 8 categories through our extensive product offering to extend the group’s reach in urban areas,” he said.
Lewis shares declined 4.13percent on the JSE yesterday to close at R36.
– BUSINESS REPORT