Lewis delivers steady growth in difficult environment - CNBC Africa

Lewis delivers steady growth in difficult environment

Earnings

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Furniture store. PHOTO: Getty Images

South Africa's largest furniture retailer’s revenue grew from 2.4 billion rand in 2012 to 2.5 billion rand for the year ended 30 September 2013 due to a higher proportion of longer term contracts and credit sales.

Lewis group's [DATA LEW:LEWIS GROUP LTD.]  gross profit margin was also consistent at 37.7 per cent, in line with management’s target of 37.5 per cent to 38.5 per cent with direct imports accounting for 28 per cent of all merchandise purchases.

However, the company stated that the trading environment was weakened by the high levels of indebtedness within the unsecured credit market, rising cost pressures and low consumer confidence.

“Lewis Group delivered a competitive performance in an extremely difficult environment marked by declining levels of consumer confidence, high levels of indebtedness within the unsecured credit market and rising cost pressures,” said the company in a statement released on Monday.

The effects of these challenges reflected in the group’s merchandise sales which only grew one per cent to 1.17 billion while operating profit also increased by one per cent to 523.4 million rand.

Headline earnings per share remained in line with last year’s figure at 372 million rand with headline earnings per share increasing slightly to 420 cents per share from 419 cents per share.

An interim dividend of 215 cents was declared for the period.

The group also embarked on an expansion plan during the financial period adding ten new outlets and bringing the store base to 627. A further 76 stores were refurbished and 13 converted to the smaller store formats.

“The group continues to invest for the future and remains on track to meet the target of opening 20 to 25 new stores for the 2014 financial year,” continued the statement.

The Lewis Group are also set to launch new merchandise ranges ahead of the festive season trading period.

While the company expects that the trading environment will remain challenging, their main focus for the year ahead will on developing strong marketing campaigns directed at creditworthy consumers, driving credit sales growth as well as containing operating and debtor costs.

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