South African furniture and appliance retailer Lewis Group Ltd reported a 30.8% drop in annual earnings on Tuesday, as the COVID-19 pandemic hit its last month of trading and it increased provision for unpaid customer debts.
Despite the effects of the pandemic, the company declared a final dividend of 65 cents per share for the year to March 31, taking the total dividend to 185 cents, around a fifth lower than the prior year.
The company’s shares were more than 6% higher by 10:29.
The owner of the Lewis and Beares brands lost crucial trading days over the March month-end trading period with lockdown requiring the closure of non-essential retailers. It said it had lost merchandise sales of about R80 million and customer credit account collections of R180 million.
COVID-19 adjustments reduced profit before taxation by R339 million and headline earnings by R224 million, it said.
This included an increase in provision for impaired debt of R123.2 million as a result of not collecting money during lockdown owed by customers who shopped on credit, and a further R190 million provision for the potential economic disruption from COVID-19.
The retailer said its headline earnings per share, the main profit gauge used in South Africa that strips out some one-off items, fell to 260.2 cents in the year to March 31 from 376.2 cents a year earlier.
Although it increased merchandise sales by 6.9% in the first 11 months, sales growth for the 12 months slowed to 4.7% due to the lockdown.
INspire, the omni-channel home shopping business, grew sales by 65.1%, while the group’s traditional retail brands Lewis, Best Home and Electric, and Beares increased sales by 3.2%.