South Africa’s Lewis Group on Wednesday reported a 9.9% increase in first-half headline earnings and announced a double-digit increase in its interim dividend, sending its shares up more than 11%.
The furniture and appliance retailer lost crucial trading days in the first two months of the national Covid-19 lockdown from the end of March, losing about R360 million ($23.73 million) in merchandise sales and R250 million in customer account collections.
Following the reopening of the stores at the beginning of June, sales growth was supported by pent-up demand and savings accumulated during lockdown, resulting in sales increasing by 20.1% for the four months to September 30.
But the demand was not enough to lift merchandise sales for the six months ended September 30, which were 4.9% lower at R1.65 billion , while overall revenue decreased by 1.6%.
Headline earnings per share – the main profit measure in South Africa – rose to 236 cents, benefiting from the repurchasing of 1.6 million shares during the reporting period, while operating profit rose by 13.6%.
The owner of Beares and UFO furniture stores declared an interim dividend of 133 cents per share, an increase of 10.8% on the prior year as “the board continues to demonstrate confidence in the group’s prospects”.
At 0915 GMT, Lewis shares jumped 11.28% to R21.50.
On the outlook for the group, CEO Johan Enslin said trading conditions are expected to become more challenging into the 2021 calendar year, with customers in the group’s lower to middle income target market being vulnerable to the rising levels of unemployment.
But he sees Black Friday and the holiday shopping season as an opportunity for the group to gain market share.