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The Lewis Group showed on Thursday how South Africans were coming under financial pressure with the furniture and appliance company's full-year cash sales sliding by double digits as more of its customers opted to buy goods on credit.
But the owner of brands such as Beares, Best Home & Electric and UFO said that as cash sales fell 16% and credit sales grew more than 18% it also managed to maintain a healthy debtors' book.
The company, which is an important bellwether for the state of the economy, said its performance "reflects the state of consumers in South Africa's low growth, high inflationary environment" adding that escalating fuel, energy, food and borrowing costs were placing "significant pressure on spending" while load shedding was "weighing heavily on consumer sentiment and economic growth".
It flagged as a highlight, the "quality and performance" of its debtors' book saying that even with a weak consumer economy it had shown good growth with collection rates strengthening and the percentage of "satisfactory paid accounts" growing to record levels. This had resulted in the reduction of the debtors' impairment provision.
"Despite this weak consumer environment, the group’s debtors’ book showed good growth of 7.5%. Our collection rates strengthened from 79% to 80.8% due to enhanced collection strategies. The percentage of satisfactory paid accounts increased to a record level of 80.4%, improving significantly from 68.4% five years ago," CEO Johan Enslin said in a statement accompanying results.
The company said that total merchandise sales grew by 1.4% to R4.4 billion in the year ended March 31 2023, while total revenue increased by 3.1% to R7.5 billion. It reported that headline earnings per share increased 1% to 857c, maintaining its total dividend at 413c per share.
Sales in its Lewis, Beares and Best Home & Electric brands increased by 3.5% while its cash retailer UFO reported a decline of 12.5%.
Enslin said the company had continued its expansion drive, opening a net 21 new stores, the highest number of net openings in seven years. Its total store base stood at 840.
He warned though that he expected the current tough retail conditions to worsen with "increasing pressure on consumer disposable income due to rising interest rates, transport costs, energy and food prices". At the same time load shedding would also continue to disrupt trading and affect sales.
Correction: An earlier version of this article incorrectly referred to Lewis CEO Johan Enslin as Jan Enslin. News24 apologises for the error.