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JD Group Rallies as Dividend Maintained: Johannesburg Mover

JD Group Ltd., South Africa’s largest publicly traded furniture retailer, gained the most in two months after it held its dividend, even as the company said the retail environment remains “challenging.”

The stock climbed as much as 6 percent, the biggest increase since June 25 on an intraday basis, before trading 2.6 percent higher at 30 rand as of 12:57 a.m. in Johannesburg. A close at this price will be the highest since Aug. 1. More than 91 percent of the three-month daily average volume of shares were traded. JD Group is the best performer today in the 11-member FTSE/JSE Africa General Retailers Index.

The total dividend for the year through June was maintained at 2.32 rand a share, while revenue rose 7.8 percent to 32.2 billion rand ($3.14 billion), the Johannesburg-based company said in a statement today. Almost 48 percent of “credit-active” South African consumers had impaired debt records at the end of June, according to the Johannesburg-based National Credit Regulator.

“It could have been a lot worse,” Mark Hodgson, a Cape Town-based analyst at Avior Research Ltd., said in a phone interview. “That JD has held the dividend is positive.”

African Bank Investments Ltd., which owns South Africa’s largest provider of unsecured loans and a furniture-retail unit, said Aug. 5 that it plans to raise as much as 4 billion rand in equity to strengthen its balance sheet after an increase in bad debts. In May, the bank’s shares tumbled after profit declined and the lender cut its dividend 71 percent.

“JD Group is not in the African Bank territory of needing to raise new capital or cut the dividend,” Hodgson said.

JD Group, which has 1,193 retail stores and brands including Bradlows and HiFi Corp., said its average credit sale acceptance rate dropped 2.3 percentage points in the year “as a result of stricter credit-granting criteria adopted and fewer customers qualifying for credit due to increased indebtedness.”

Last week, Shoprite Holdings Ltd.’s furniture division said it had the toughest year in a decade as consumers took out loans to pay expenses. Shoprite Furniture Division Director Aubrey Karp said the low-growth environment may continue until the end of 2015.

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