Lewis reports strong post-lockdown recovery


Lewis reports strong post-lockdown recovery


Published Date: 2021-05-28 | Source: Stephen Gunnion | Author: Stephen Gunnion

Lewis reports strong post-lockdown recovery

The furniture retailer ensured that its stores were well stocked to meet the post lockdown demand.

Lewis Group has more than doubled full-year profit after overcoming the adverse impact of Covid-19 trading restrictions.

Merchandise sales increased by 6.7% to R3.9-billion after a 17% rise in second-half sales more than compensated for a 4.9% decline in the first half of the year when it was forced to close its stores during the hard lockdown. Its gross profit margin improved by 80 basis points to 41.8% while its operating profit margin rose to 17.7% from 6.9%.

CEO Johan Enslin said sales were supported by new merchandise ranges introduced in the second half of the year and high levels of stock availability.

Debtor costs reduced by 19.5% over last year when an additional Covid-19 debtors' impairment provision of R190-million was raised. It said this reflected the improving quality of the debtors' book, supported by enhanced collection practices. After losing approximately R250-million in customer account collections when stores were closed last April and May, collection rates recovered steadily after lockdown and averaged 72% for the year compared to 74.5% in the previous year.

For the year, total revenue increased by 4.2% to R6.7-billion and operating profit rose 174% to R696-million. Headline earnings increased by 126% to R463-million and it has raised its total dividend for the year by 77% to 328c per share. The group said it ended the year with a strong balance sheet and no borrowings while cash generated from its operations increased by 47% to R915-million.

Lewis repurchased 5.4 million shares during the year at an average market price of R20.92 per share. Since the start of its share repurchase programme in 2017, the group has bought back 17.3 million shares at an average price of R27.38 per share.

Enslin said the sales momentum built up in the second half had continued into the new financial year, supported by good stock availability. Inventory had been increased to ensure adequate stock levels to counter the challenges in the supply chain, including the global shortage of shipping containers and severe port congestion.

Despite the improvement, he warned that trading conditions were likely to become increasingly challenging in the months ahead.

The company's shares closed 2.7% higher at R34.50 yesterday. They rose 17.5% on 12 May when it alerted investors to its performance in a trading statement.


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