Lewis shares soar after quarterly trading update
By Wilson Johwa - Jan 23rd 2018, 11:32
Furniture retailer Lewis’s share price rose as much as 16.5% to R28.31 on Tuesday morning, following the release of its December-quarter trading update.
Revenue rose by 0.7% during the quarter, a turnaround from the 3.2% decline it reported in its interim results for the six months to end-September.
Lewis said its poor interim sales dragged its revenue for the nine months to end-December down by 1.7% from the matching period.
The main decline was in what Lewis calls "other revenue", which fell 9.6% during the first nine months of the financial year underway.
The group ascribed the decline in other revenue to falling annuity streams from credit sales in prior years, worsened by the implementation of the prescribed maximum credit life insurance rates in August 2017.
Merchandise sales for the quarter were 9.8% higher than the corresponding period, resulting in a 7% growth for the nine months ended December 31, 2017.
Comparable stores sales grew by 13.3% for the quarter and 9.8% for the nine months.
In June last year, the Consumer Tribunal dismissed the National Credit Regulator’s (NCR’s) complaint against Lewis Stores relating to the retailer’s club fees and extended warranties.
The judgment was met with dismay by a consumer group and the NCR was to have been planning to launch an appeal.
The regulator had argued that the club fee was an additional "cost of credit" to consumers, which was prohibited under the National Credit Act, and extended warranties either did not exist or ran concurrently with manufacturers’ warranties.
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