| Imagery Source: Moneyweb |
| Information Source: Share Net |
| 1. Introduction |
| Shareholders are advised that the following have been distributed: |
- unaudited interim results for the six months ended 30 September 2025 (“results announcement”)
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- Cash dividend declaration of 337 cents per share.
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| 2. Highlights |
- Revenue increased by 11.3% to R4.8 billion
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- Merchandise sales increased by 6.7% to R2.5 billion
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- Other revenue increased by 16.7% to R2.3 billion
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- Gross profit margin improved from 40.9% to 41.0%
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- Satisfactory paid accounts up from 81.6% to 82.7%
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- Debtors' book grew by 14.0%
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- Operating profit increased by 21.4% to R522 million
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- Operating profit margin up 250 bps to 20.7%
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- Earnings per share increased by 13.8% to 619 cents
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- Headline earnings per share increased by 16.8% to 648 cents
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- Interim dividend increased by 12.3% to 337 cents per share
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| 3. Results Commentary |
| Lewis Group delivered a strong performance for the six months ended 30 September 2025, with operating profit increasing by 21.4%, driven by expanding margins and the good quality of the debtors' portfolio. While trading conditions remained constrained, the Group continued to invest for longer-term growth by increasing the store footprint and growing the debtors' book, which increased by 14.0% to R8.5 billion. |
| The store base increased to 958 following the opening of a net 40 new stores in the first half of the year, the highest number of stores opened by the Group in any six months. This resulted in the Group achieving its full-year store opening target within 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. |
| Trading and financial performance |
| Merchandise sales increased by 6.7% to R2.5 billion. Sales in the traditional retail segment, which accounted for 89.7% of sales, increased by 6.4%. The speciality segment, comprising predominantly 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 18.0% of Group merchandise sales. |
| Credit sales increased by 8.0% and accounted for 70.3% of total merchandise sales (H1 2025: 69.4%). The Group maintained its strict credit-granting criteria in the constrained spending environment, with the credit application decline rate settling at 41.2% (H1 2025: 37.4%). Cash sales increased by 3.7%. |
| Other revenue, consisting of effective 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 R4.8 billion (H1 2025: R4.4 billion). |
| The gross profit margin strengthened by 10 basis points to 41.0%, at the mid-point of management’s target range. |
| Operating cost growth of 10.0% was contained below revenue growth. Costs were impacted by the accelerated expansion of the store base. |
| The quality of the Group’s debtors book remains sound, with satisfactory paying customers increasing to 82.7% (H1 2025: 81.6%). The collection rate at 78.3% (H1 2025: 79.5%) was consistent with the rate reported for the second half of the 2025 financial year. |
| Debtor costs increased by 12.9%, with debtor costs as a percentage of debtors at gross carrying value improving to 6.8% from 6.9%. The debtors' impairment provision as a percentage of debtors at gross carrying value reduced to 36.9% (H1 2025: 37.1%), reflecting the improved composition of the debtors' book. |
| Operating profit increased by 21.4% to R522 million, and the operating margin expanded by 250 basis points to 20.7%. Impairments and capital items totalled R20.7 million (H1 2025: R7.9 million) relating to the impairment of right-of-use assets in UFO. |
| Net finance costs were R26.7 million higher at R114.4 million due to higher levels of borrowings resulting from the investment in the debtors' book and store expansion over the reporting period. |
| The Group’s net borrowings totalled R1 481 million at 30 September 2025. The gearing ratio (including lease liabilities) increased to 48.5% (H1 2025: 46.1%), and the borrowings ratio (gearing ratio, excluding lease liabilities) increased to 29.0% (H1 2025: 26.5%). |
| Headline earnings increased by 16.0% to R335.1 million. Earnings per share increased 13.8% to 619 cents and headline earnings per share by 16.8% to 648 cents, reflecting the positive leverage effect of share repurchases undertaken in prior years. |
| The interim dividend was increased by 12.3% to 337 cents per share, based on an earnings payout ratio of 55%. |
| The Group’s balance sheet remains strong, and the net asset value per share increased by 6.6% to R98.23. |
| Outlook |
| 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. |
| 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. |
| Management intends to open a further 15 to 20 stores in the second half of the year, mainly in the specialist bedding brands. |
| Dividend declaration |
| Notice is hereby given that an interim gross cash dividend of 337 cents per share in respect of the six months ended 30 September 2025 has been declared payable to holders of ordinary shares. The number of shares in issue as of the date of declaration is 52,159,288. The dividend has been declared out of income reserves and is subject to a dividend tax of 20%. The dividend for determining the dividend tax is 337 cents, and the dividend tax payable is 67.4 cents for shareholders who are not exempt. The net dividend for shareholders who are not exempt will therefore be 269.6 cents. The dividend tax rate may be reduced where the shareholder is tax resident in a foreign jurisdiction which has a Double Tax Convention with South Africa and meets the requirements for a reduced tax rate. The Company's tax reference number is 9551/419/15/4. |
| The following dates apply to this declaration: |
| Last date to trade "cum" dividend: Tuesday, 20 January 2026 |
| Date trading commences "ex" dividend: Wednesday, 21 January 2026 |
| Record date: Friday, 23 January 2026 |
| Date of payment: Monday, 26 January 2026 |
| Share certificates may not be dematerialised or rematerialised between Wednesday, 21 January 2026 and Friday, 23 January 2026, both days inclusive. |
| For the full document, click the link below |
| Lewis Group Limited |
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