THE RE­TAIL­ERS

CityPress - - Business -

JD GROUP

(Brad­lows, Bar­netts, Elec­tric Ex­press, Joshua Doore, Morkels, Price ‘n Pride, Rus­sells, Supreme, HiFi Corp, In­cred­i­ble Con­nec­tion, Tim­ber City and oth­ers)

JD Group fell into a loss­mak­ing po­si­tion in the sec­ond half of last year – mostly be­cause of a jump in “debtors’ costs”.

Half of that was debts writ­ten off and the other half new pro­vi­sions for debts that are over­due.

The group’s debt cost es­ca­lated to R1.1 bil­lion in the half year to De­cem­ber, push­ing it into a loss of R159 mil­lion.

The jump in bad debt in the half year was sud­den and se­vere with a three­fold in­crease com­pared with a year ear­lier. The debt cost was equal to the full year debtors’ cost in­curred by the group in the en­tire 2009, which had been the worst on record.

JD Group is owed about R8.7 bil­lion by peo­ple who bought things on credit. About half of that sits in ac­counts that are more than a month over­due.

Back in 2012, the ra­tio was just 25%.

LEWIS

(Lewis, Best Home and Elec­tric, My Home and Monarch In­sur­ance Com­pany) Lewis’ re­sults for the year to March tell a sim­i­lar tale. The group makes al­most the same amount of money from fi­nance and in­sur­ance charges as it does from sell­ing mer­chan­dise.

Its rev­enue of R5.3 bil­lion in­cluded fi­nance charges of R1.2 bil­lion and in­sur­ance pre­mi­ums of R688 mil­lion.

The prob­lem is that the fi­nance in­come has to be weighed against the losses caused by debtors that stop pay­ing.

Lewis’ debtor costs jumped to R702 mil­lion from R540 mil­lion a year ear­lier – mostly in the form of bad debts and re­pos­ses­sion losses. Lewis has about 680 000 ac­count hold­ers and the num­ber of those that are “sat­is­fac­to­rily” up to date on pay­ments is erod­ing ev­ery year.

The per­cent­age that is nearly up to date was 74.5% in 2011, but is now 68.3%. Lewis is still mak­ing money, al­though the drop in its net profit from R911 mil­lion to R842 mil­lion is largely due to the jump in debt costs.

EL­LER­INES

The black hole in­side African Bank was the fur­ni­ture re­tail group El­ler­ines, which it bought in 2008.

El­ler­ines owns the El­ler­ines brand as well as Beares, Fur­ni­ture City, Wether­leys and Dial-a-Bed.

In its last fi­nan­cial year be­fore African Bank’s re­cent im­plo­sion, El­ler­ines wrote off 31.5% of its loan book, about R2 bil­lion, and still had a fur­ther 25% of loans clas­si­fied as non­per­form­ing be­cause they were more than three months over­due.

El­ler­ines re­sponded by ex­tend­ing less credit. In the nine months to the end of June, the ef­fect of that was a 12% drop in sales to R2.8 bil­lion.

The part of sales done on credit fell from R2 bil­lion to R1.5 bil­lion. The com­pany was placed in busi­ness res­cue shortly be­fore African Bank’s cu­ra­tor­ship this month.

But the gen­eral con­trac­tion in credit – and the in­creas­ing in­abil­ity of peo­ple to re­pay the loans and ac­counts they have spreads far be­yond El­ler­ines and African Bank.

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