Post office strike dents HomeChoice profits
HomeChoice sales rose last year but did not translate into better profits, because of excess stock that did not get delivered during the strike at the SA Post Office.
The homeware and bedding retailer released its annual results yesterday with retail sales up 4.9% to R2bn, but said heavy discounting to get rid of excess stock hit profits.
The company said in a statement that stock ordered online or through the call centre was not delivered by the post office due to strikes and then later returned.
It had to sell the excess stock, mostly bedding, at a discount to clear it.
HomeChoice sells homeware, cookware and bedding online, through a call centre, direct marketing agents and at 10 big stores, including in Maponya Mall and the Johannesburg CBD.
It is also a credit provider through brand FinChoice.
Its 912,000 strong customer base are mostly urban women with an average monthly income of R10,000.
To reduce reliance on the post office, it has added six new bright pink shipping container stores in Gauteng and Western and Eastern Cape townships allowing people to collect online orders.
The company thinks it can expand its eight shipping container collecting points to as many as 50 container stores in the townships.
In a statement, the company said: “We have reduced our reliance on the SA Post Office for parcel deliveries from 23% to 16%, and a further reduction is planned for 2020.”
Its courier deliveries make up 86% of all sales, with online click and collect equalling 10% of all orders.
Last year, HomeChoice gained 271,000 new customers and increased loans granted by 27% year on year.
It is increasingly using digital channels to offer loans.
Extending R2bn of credit via digital platforms during the year was an important milestone for the group, through its brand FinChoice, the company said.
But HomeChoice said it was experiencing higher bad debt and write-offs.
HomeChoice SA CEO Shirley Maltz said: “The financial results were a product of a tough economic environment and operational challenges.”
HomeChoice declared an annual dividend of 166c, down 14.4%.