SA’s furnisher retailer Lewis said on Friday its merchandise sales rose a modest 4% in the nine months ended December — an indication of the squeeze in consumers’ discretionary spending. Same-store sales grew just 1.5% over the reporting period.
Lewis targets predominantly lower-income consumers through the Lewis, Beares and Best Home & Electric brands. But it also owns United Furniture Outlets (UFO) that caters to the upper-income market.
Retail brands Lewis, Beares and Best Home & Electric grew sales 6.6%, driven by consumer demand for credit. However, sales in the group’s cash retail brand UFO declined 14.5%.
Group credit sales rose 17.5%, accounting for 65.8% of total sales during the reporting period. However, group cash fell 14.4%, indicting the effects of higher fuel, electricity, food and borrowing costs on discretionary spending.
Comparable store sales in the traditional brands grew 3.2% year on year.
Collection rates were quite stable at 80.7% vs 82% in the same period a year earlier. Debtor costs rose 59.8% due to growth in the debtors’ book.
For the three months ended December, merchandise sales rose 3.5%. Sales in the traditional retail business increased 5.7% while UFO sales dropped 14.8%.
Other revenue, consisting of effective interest income, ancillary services income and insurance revenue, benefited from the strong credit sales growth over the past two years, and rose 18.5% for the third quarter and 15.2% for the nine months.
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