Lewis Group's growth: 21.4% rise in operating profit and new store opening record

Lewis Group increased its interim dividend 12.3% to 337 cents per share in the six months to September 30 helped by expanding margins, store growth and a good quality debtor's portfolio, CEO Johan Enslin said. 

“Lewis Group delivered a strong performance for the six months, with operating profit increasing by 21.4%, the JSE-listed furniture, homeware, appliances, and electronic retail group's interim results showed on Thursday.

The store base increased to 958 in the six months following the opening of a net 40 new stores, the highest number of stores opened by the group in any six-month period.

This resulted in the group achieving its full-year store opening target in the first half. The openings included 28 new outlets for Real Beds, the bedding specialist acquired in 2024, expanding the brand's store base to 44.

Management intends to open a further 15 to 20 stores in the second half of the year, mainly in the specialist bedding brands, said Enslin.

Appealing marketing campaigns and promotions are planned across all brands to drive sales growth during the Black Friday and festive season trading period, supported by new merchandise ranges and good stock availability.

Enslin said that against the backdrop of continued uncertainty in global markets and local political instability, discretionary spending is expected to remain constrained in the short to medium term as consumers experience increasing financial pressure.

“While lower inflation and reduced borrowing costs are positive for consumers, persistently high unemployment and limited job creation in the country’s low growth environment continue to weigh on consumer confidence.”

Group revenue in the first half increased by 11.3% to R4.8 billion. Merchandise sales increased by 6.7% to R2.5bn. Other revenue increased by 16.7% to R2.3bn. Operating profit increased by 21.4% to R522 million. Headline earnings per share increased by 16.8% to 648 cents.

Enslin said trading conditions remained constrained, but the group continued to invest for growth by increasing the store footprint and growing the debtors book, which increased14% to R8.5bn.

Merchandise sales increased by 6.7% to R2.5bn. Sales in the traditional retail segment, which accounted for 89.7% of sales, increased by 6.4%. The speciality segment, comprising mainly of UFO, Bedzone, and Real Beds, grew sales by 9.1%. Comparable store sales across all brands grew by 2.3%.

Sales in the stores outside South Africa, which represent 15.1% of the store base, increased by 7.7% and accounted for 18% of group merchandise sales.

The group maintained a strict credit granting criteria in the constrained spending environment, with the credit application decline rate settling at 41.2% (H1 2025: 37.4%).

Other revenue, comprising interest income and ancillary services income as well as insurance revenue, benefited from the strong credit sales growth in recent years and increased by 16.7%.

Total revenue, comprising merchandise sales and other revenue, increased by 11.3% to R4.8bn (R4.4bn).

The quality of the debtors book remained sound, with satisfactory paying customers increasing to 82.7%. The collection rate at 78.3% was consistent with that reported for the second half of the 2025 year.

Operating profit increased by 21.4% to R522m, and the operating margin expanded by 250 basis points to 20.7%. Net finance costs were R26.7m higher at R114.4m due to higher levels of borrowings resulting from the investment in the debtors book and store expansion over the reporting period.

The gearing ratio increased to 48.5% (46.1%).

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