Lewis Group’s Financial Triumph: 8.3% Revenue Surge and 19.5% Credit Sales Growth Signal Market Resilience in H1 2023

  • Lewis Group's H1 2023 reveals robust financials, with merchandise sales and revenue surging, showcasing economic resilience.
  • Gross profit margin strengthens to 40.7%, while strategic credit sales growth reaches 19.5%.
Published by
Lethabo Ntsoane

Lewis Group Limited, a stalwart in the South African retail landscape, has unveiled its unaudited financial statements for the six months ending September 30, 2023. The report not only showcases a commendable financial performance but also sheds light on the economic challenges faced and strategic moves made by the group in navigating the complex market dynamics.

Financial Highlights

Merchandise Sales and Revenue Surge

Merchandise sales saw a healthy 4.8% increase, reaching R2.2 billion, a testament to the group’s resilience in a challenging economic climate. Revenue, a key indicator of overall financial health, mirrored this growth trend, ascending by 8.3% to R3.8 billion. This upward trajectory was buttressed by new product ranges and robust advertising campaigns, underlining the group’s commitment to innovation and customer engagement.

Financial MetricAmount (in Billion Rand)Percentage Change
Merchandise SalesR2.2+4.8%

Profitability Metrics

The gross profit margin experienced a notable uptick, increasing by 140 basis points to 40.7%, comfortably within the group’s targeted range of 40% – 42%. The prudent reduction in inventory levels, down by 23%, played a pivotal role in bolstering this margin.

Operating profit followed suit, rising by 7.5% to R309.3 million. The group’s strict credit granting criteria and focus on attracting lower-risk credit customers paid off, with satisfactory paid accounts reaching an impressive 79.9%.

Financial MetricPercentage Change
Gross Profit Margin+140 bps to 40.7%
Operating Profit+7.5% to R309.3 million
Satisfactory Paid Accounts79.9%

Earnings and Dividend

Earnings per share (EPS) experienced a modest uptick, increasing by 2.6% to 355 cents. However, headline earnings per share (HEPS) saw a decrease of 6.6% at 372 cents, reflecting the nuanced dynamics of the market.

Despite this, the board demonstrated confidence in the group’s financial health by increasing the interim dividend by 2.6% to 200 cents per share. This decision aligns with a payout ratio of 55.6%, demonstrating a commitment to shareholders amidst economic uncertainties.

Financial MetricPercentage Change
Earnings Per Share (EPS)+2.6% to 355 cents
Headline Earnings Per Share (HEPS)-6.6% at 372 cents
Interim Dividend+2.6% to 200 cents per share

Operational Insights

Credit Sales and Consumer Dynamics

A standout feature of Lewis Group’s performance was the robust growth in credit sales, which surged by 19.5%. This trend, witnessed over the past two years, reflects consumer reliance on credit despite economic pressures. Credit sales now constitute 64.4% of total merchandise sales, a significant increase from 56.5% in the preceding half-year.

Operational MetricPercentage Change
Credit Sales Growth+19.5%
Credit Sales as a Percentage of Total Merchandise Sales64.4%

Geographical Expansion and Store Footprint

Sales outside South Africa, contributing 15.9% to the store base, grew by 4.9%, accounting for 18.7% of the Group’s sales. The group strategically opened 29 new stores in the traditional retail segment, including five beyond South African borders. With a total footprint of 868 stores, including 138 internationally, the group remains committed to strategic expansion.

Debtors’ Book and Impairment Provision

The debtors’ book witnessed robust growth, expanding by 10.8%. The quality of the book remained evident in the satisfactory paid accounts, increasing to 79.9%. Notably, the debtors’ impairment provision, as a percentage of debtors at gross carrying value, decreased from 38.3% to 36.0%, showcasing the health of the book over recent years.

However, with growth comes increased provisioning, and the debtors’ impairment provision rose by R147 million. Total debtor costs increased by R192.1 million, with debtor costs as a percentage of debtors at gross carrying value increasing from 4.4% to 7.0%.

Operational MetricPercentage Change
Debtors’ Book Growth+10.8%
Satisfactory Paid Accounts79.9%
Debtors’ Impairment Provision-2.3% to 36.0%

Share Repurchase Program

Lewis Group’s share repurchase program has been instrumental in contributing to positive leverage. In the first six months of the financial year, the group repurchased 3.1 million shares at a cost of R124.3 million, with an average price per share of R40.63. Since listing, the group has repurchased 45.8 million shares at a cost of R1.8 billion.

The program’s success is evident in the weighted average number of shares in issue, which reduced by 8.6% relative to the comparable period. The board’s decision to grant a new mandate for a further 10% share repurchase underscores confidence in this strategy.

Financial Strategy and Outlook

Strategic Investments and Financial Discipline

Despite economic headwinds, Lewis Group remains committed to long-term growth. The opening of 29 new stores in the first half of the year has proven successful, with plans for an additional 10 stores in the second half.

The financial discipline is evident in the prudent management of operating costs, including insurance service expenses. Operating costs, growing by 4.2%, were well-contained despite significant transport and energy inflation. The group received proceeds of R22.7 million for business interruption losses related to the 2021 civil unrest, contributing to operating profit.

Market Dynamics and Consumer Sentiment

The outlook acknowledges the challenges of a depressed consumer spending environment due to economic pressures. Load shedding and port congestion are identified as potential factors negatively impacting economic growth. However, the group anticipates continued consumer demand for credit and plans to leverage its loyal customer base and differentiated merchandise offering to gain market share.

Strategic measures, including appealing festive season promotions supported by new merchandise ranges, high stock availability, and robust marketing campaigns, are set to drive consumer engagement across all brands.

UFO Restructuring and Cost Saving Measures

The restructuring of UFO, the group’s cash retail brand, aimed at right-sizing the business and implementing extensive cost-saving measures, resulted in the business reporting an operating profit for the half-year. Management remains focused on improving UFO’s performance through exclusive merchandise offerings and enhanced social media marketing strategies.

Dividend Declaration and Key Dates

A gross cash dividend of 200 cents per share has been declared, subject to a dividend tax of 20%. The dividend tax payable is 40 cents for shareholders who are not exempt, resulting in a net dividend of 160 cents. Shareholders are advised of key dates associated with the dividend declaration:

January 16, 2024Last date to trade “cum” dividend
January 17, 2024Date trading commences “ex” dividend
January 19, 2024Record date
January 22, 2024Date of payment


Lewis Group Limited’s H1 2023 performance reflects resilience, strategic acumen, and a commitment to navigating the complexities of the retail landscape. The group’s ability to adapt to market dynamics, capitalize on growth opportunities, and maintain financial discipline underscores its position as a key player in South Africa’s retail sector.

Investors, analysts, and stakeholders will undoubtedly scrutinize these results and the outlined strategies as the group continues its journey in an ever-evolving economic landscape. Lewis Group’s story, as told through its financial results, offers insights not only into its own performance but also into the broader economic currents shaping the South African business landscape.


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Lethabo Ntsoane

Lethabo Ntsoane holds a Bachelors Degree in Accounting from the University of South Africa. He is a Financial Product commentator at Rateweb. He is an expect financial product analyst with years of experience in reviewing products and offering commentary. Lethabo majors in financial news, reviews and financial tips. He can be contacted: Email: lethabo@rateweb.co.za Twitter: @NtsoaneLethabo