Lewis shows un­der­whelm­ing trade up­date

The Star Early Edition - - COMPANIES - Ka­belo Khu­malo

AF­TER months of share­holder dis­gruntle­ment and fac­ing a fine by the Na­tional Credit Tri­bunal (NCT) for hav­ing breached the Na­tional Credit Act, Lewis Stores yes­ter­day re­ported an un­der­whelm­ing trad­ing up­date for the third quar­ter and nine months to De­cem­ber.

The group’s rev­enue de­clined by 7.5 per­cent while its mer­chan­dise sales were 5.6 per­cent lower in the third quar­ter com­pared to the prior com­par­a­tive pe­riod. Rev­enue for the nine months pe­riod de­clined by 4 per­cent and mer­chan­dise sales by 2 per­cent.

The com­pany said credit sales were neg­a­tively im­pacted by the need to meet reg­u­la­tory credit as­sess­ment re­quire­ments.

“Credit sales con­tin­ued to be sig­nif­i­cantly im­pacted by the af­ford­abil­ity as­sess­ments, which re­main a ma­jor hur­dle in the group’s lower in­come tar­get mar­ket,” the group said.

Share­holder ac­tivist David Wool­lam last year de­manded that Lewis chief ex­ec­u­tive Jo­han Enslin, chief fi­nan­cial of­fi­cer Les Davies, non-ex­ec­u­tive chair­man David Nurek and non-ex­ec­u­tive di­rec­tor Hilton Saven be de­clared delin­quent in terms of the Com­pa­nies Act, af­ter ac­cus­ing them of de­stroy­ing share­holder value by en­gag­ing in greedy busi­ness prac­tices. The High Court in Cape Town sub­se­quently dis­missed Wool­lam’s ap­pli­ca­tion.

How­ever, the NCT in De­cem­ber ruled the com­pany had trans­gressed the Na­tional Credit Act by sell­ing loss of em­ploy­ment to self-em­ployed con­sumers and dis­abil­ity cover as part of credit in­surance to pen­sion­ers.

The tri­bunal in­ter­dicted the com­pany from en­gag­ing in sim­i­lar con­duct in the fu­ture and or­dered an in­de­pen­dent au­dit to be con­ducted on all agree­ments en­tered into by Lewis Stores since 2007.

The com­pany would be re­quired to re­im­burse the pre­mi­ums that were paid for this in­surance. The Na­tional Credit Reg­u­la­tor had said it would re­turn to the NCT to ar­gue in favour of the im­po­si­tion of a fine on Lewis.

Absa in­vest­ment an­a­lyst Chris Gil­mour said the new credit reg­u­la­tions had meant re­tail­ers were forced to re­ject many ap­pli­cants, im­pact­ing on rev­enue and growth.

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