Lewis Slides as South African Labor Instability Hurts SalesJanice Kew
Lewis Group Ltd., a South African furniture and electrical-goods retailer, fell the most in nine months after it said revenue in the three months through December dropped as disposable incomes shrank.
The stock slumped as much as 7.4 percent, the biggest decline since 2008, and traded 5.6 percent lower at 59.62 rand as of the market close in Johannesburg. That compared with little change in the 11-member FTSE/JSE Africa General Retailers Index. Lewis declined 5.6 percent yesterday.
“Trading conditions remained challenging with labor instability across many sectors,” the company said in a statement released after the market closed yesterday.
Strikes at South African mines and carmakers have weakened confidence in Africa’s biggest economy, with retailers reporting lower sales growth as rising unemployment and inflation curbed spending. The Reserve Bank increased its benchmark interest rate by half a percentage point to 5.5 percent this week, which could weigh further on economic growth, already at the slowest pace since the 2009 recession.
Revenue for the quarter ended Dec. 31 fell 1.5 percent, with merchandise sales decreasing 6.3 percent, Lewis said. For the nine months through December merchandise sales fell 2.3 percent, with the costs related to consumer debt climbing 30 percent.