Retailer Lewis anticipates 45% profit drop

Lewis announced on 21 October that the National Credit Regulator's (NCR) affordability assessment guidelines, along with the currently tough economic times, have led to the retailer’s profit dropping by up to 45% in half-year trading. The company said in a statement:

"The performance … reflects the challenging economic and consumer environment in which the business is trading and how these conditions have impacted the group's lower to middle income target customers… This has been compounded by the ongoing impact of the NCR's affordability assessment guidelines, which are restricting access to credit in South Africa and severely limiting the group's credit sales."

The group further said that it expects its headline earnings per share (Heps) to be between 35% and 45% lower. It noted that merchandise sales for the period were in line with last year, with like-for-like merchandise sales down 9.2%, and that revenue declined by 2%, mainly as a result of a 4% decline in other revenue over the corresponding prior period.

That said, the group's gross profit margin has continued to expand in line with management's expectations, improving to 40.5% compared to 36.4% in the previous year.