Lewis Group's growth strategy: New stores and record earnings

LEWIS Group's robust 66.9% increase in operating profit to R1.2 billion for the year to March 31 was driven by strong credit sales, expanding margins and good growth in the debtors’ portfolio.

- EDWARD WEST

The exceptional results saw investors drive up the share price by 6.28% on Thursday afternoon to R83.45, bringing the rally in the price to 83% over 12 months.

Satisfactory paying customers for the retailer of furniture, home appliances, electronics and homeware reached a new record high. The operating margin improved significantly by 790 basis points to 22.7% from 14.8%.

CEO Johan Enslin said in an interview that sales and collections in April and May were in line with their expectations. He said that exclusive new ranges in August and September would boost sales, and the group was on track to open at least 40 new stores in the upcoming financial year.

The furniture retail group increased headline earnings by 53.5% to R768 million and headline earnings per share by 60.3% to 1 483 cents, supported by the positive leverage from the share repurchase program.

Enslin said the share buyback program was on pause for now, after the valuation gap in the share price had closed following 8 years of share buybacks that had seen the group buy back some 48% of its shares.