Lewis share price falls to new low
By Ann Crotty - Oct 30th 2017, 08:50
The share price of furniture retailer Lewis Group slumped to a new low of R26.50 on Friday after a downbeat trading update.
The update advised shareholders that earnings for the six months ended-September would be 12% to 18% lower than the comparative period in financial 2017.
The expected range for earnings was 161.2c/share to 173c/ share, management said.
The share price weakened although the performance appeared to be in line with analysts’ expectations and mirrored results of the past two halves.
The performance reflected the challenging economic and consumer environment and the effect of these tough conditions on the group’s lower-to middle-income target customers, management said in the update.
“Trading conditions have been compounded by the ongoing impact of the National Credit Act’s affordability assessment regulations, which are restricting access to credit in SA and limiting the group’s credit sales,” Lewis said.
Merchandise sales increased 5% with comparable sales up 7.3%. But a 9.8% decline in “other revenue” led to revenue falling 3.2%. The decline in “other revenue” was largely the result of lower credit sales in previous reporting periods, which negatively affected the group’s annuity income stream.
Gross profit margins strengthened 40 basis points to 40.9%, in line with the management’s expectations, while improved collections helped to reduce debtor costs by 11.5%. During financial 2017, debtor costs increased by 6%.
The share price slump follows a share buyback exercise by Lewis, which repurchased more than 2.9-million shares on the open market at prices ranging from R28.62 and R35.50 from the end of May to the end of September.© BusinessLIVE MMXVII
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