Lewis Group Ltd. (LEW), a South African furniture and electrical-goods retailer, climbed the most in almost nine years after reporting full-year earnings that beat analyst estimates.
The stock jumped as much as 13 percent to 58.98 rand, beating the 1.2 percent gain in the 11-member FTSE/JSE Africa General Retailers Index. Lewis traded at 57.40 rand at 1:43 p.m. in Johannesburg, the biggest gain on a closing basis since at least Oct. 5, 2004, paring its decline this year to 17 percent.
Earnings per share excluding one-time items rose to 9.93 rand in the 12 months through March from 8.72 rand a year earlier, the Cape Town-based company said in a statement today. That beat the 9.26 rand median estimate of 10 analysts surveyed by Bloomberg.
“The credit environment has been very tough, but this is not unchartered water for us,” Chief Executive Officer Johan Enslin said in a phone interview from Cape Town.
South African retail sales growth slowed to 2.8 percent in March from 3.9 percent in February as inflation remained close to the top of the central bank’s target and a 25 percent jobless rate hurt consumer spending. African Bank Investments Ltd., South Africa’s biggest provider of unsecured loans, spooked investors earlier this week after saying bad-debt charges will remain high and that risks were increasing at its furniture-retailing unit.
The main Lewis brand and the company’s Best Home & Electric chain opened 23 stores in the fiscal year, bringing the group’s retail network to 619 outlets. The company plans to open 20 to 25 stores annually in the next four years, Enslin said.
“We have placed store managers that understand the nuances of the town” where they work, he said. “They are empowered to choose the right stock and build relationships with customers so repayments are improved,” Enslin said. About 55 percent of Lewis shoppers are repeat customers, he said.
The new Lewis outlets are smaller, which is improving profitability, he said. Lewis has also relocated to smaller premises and reduced space in large stores as leases have come up for renewal.
Net income increased 13 percent to 907.4 million rand ($95 million), the company said. Sales gained 6.8 percent to 5.19 billion rand. Debtor costs as a percentage of net debtors improved to 9.4 percent in 2013 from 10.8 percent in 2012. The annual dividend rose 16 percent to 5.14 rand.
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