HomeChoice’s fintech business spurs growth

But profit still below pre-pandemic levels.
HomeChoice’s Soweto showroom. Image: Supplied

JSE-listed HomeChoice International on Monday reported a rise in key metrics for the year ended December 2021, aided by the performance of its fast-growing financial services stable FinChoice.

The owner of omnichannel retailer HomeChoice – which sells houseware and consumer electronics on credit through call centres and direct marketing – reported a 4.8% increase in revenue to R3.4 billion and a 43% jump in trading profit to R386 million for the period.

The group also saw a 24% rise in headline earnings per share (Heps) to 203.5 cents compared to 2020 and declared a dividend of 67 cents for the period.

Although showing an improvement from its 2020 performance which took a hit as a result of the Covid-19 pandemic, the group’s 2021 full-year performance still falls short of that registered in 2019.

Retail sales were down 4.8% to R3.4 billion. Operating profit fell by 2.6% to R263 million – impacted by a once-off impairment cost of R123 million mainly in the retail segment, related to costs of legacy software that was no longer fit for purpose and staff restructuring costs.

HomeChoice CEO Chris de Wit says the company has done a thorough review of its IT systems and has been shopping around for solutions that will cost-effectively cater to the company’s existing and growing digital needs.

He says its strategy hinges on having IT solutions that are not heavily customisable but rather best-of-breed propositions that it can take off the shelf, saying the company has had some experience with systems that “were customisable and quite expensive” to develop, maintain and run.

Fintech continues to thrive

Weaver Fintech, the group’s financial services arm, registered 69.1% growth in trading profit for the period, while FinChoice – which offers funeral cover, personal loans and a MobiMoney credit facility – saw a 73.8% increase in loan disbursements to R3.3 billion, growing significantly from that recorded in 2019 of R2.266 billion. 

The group’s insurance products saw a 42% increase in gross written premiums, with 93 000 customers and a 45% penetration of the FinChoice active loan base. 

The group says although its fintech business is currently leading the group’s performance and its retail segment is still trying to recover from the blows dealt by disruptions seen in the last two years, it has no plans to downscale its retail offering as the retail segment remains an important springboard for the success of its financial services business. 

“The strategy is that we are going to grow the Weaver Fintech business,” FinChoice CEO Sean Wibberley tells Moneyweb.

We’ve got the acquisition of PayJustNow, which has increased our customers up to 450 000 now, and the idea is to synergistically share data between FinChoice – the financial services businesses – in order to grow the fintech stable considerably.

“On the HomeChoice side, they are in a recovery phase so what they are doing is sorting out their processes, their systems and their credit, and driving their retail demand.”

“It is definitely a strong part of the group and part of our heritage, and we don’t envisage downscaling it – we envisage rightsizing it and getting it back on its feet again,” he adds.

Impact of Russia’s invasion of Ukraine

HomeChoice says it doesn’t expect to experience any direct supply chain impacts as a result of the conflict in Eastern Europe. 

De Wit tells Moneyweb that the group does however expect rising inflationary pressures as a result of the conflict to affect its customers’ disposable income.

“What we need to do to remain relevant and competitive in the market is to ensure that we still give the right value to our customers and follow good lending criteria and ensure that we go on that journey with them,” he says.

The market received the group’s performance well as HomeChoice International’s share price rose around 7% during trade on Tuesday, closing at R29.89.



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