Lewis Group flags profit drop as sales slow

Johannesburg - The Lewis Group expects a drop in full-year profit of up to 29% after sales slowed in the second half of its trading period due to a weak economy, the company said on Monday.

Lewis, which sells mostly to lower income groups on in-store credit, said headline earnings per share (EPS) for the year to end-March will be between 642 cents and 600 cents, compared to 845 cents the previous year.

Headline EPS is the main profit measure in South Africa and strips out certain one-off items.

"Trading conditions became increasingly challenging in the second half of the period owing to the further slowdown in the economy," the company said in a statement.

Sales dropped by 2% in the second half of the year, slowing annual revenue growth to 2.9%, it said.

Higher unemployment in the group's target market and the introduction of affordability guidelines by the national credit regulator negatively impacted credit sales, the firm said.

Data released last week showed unemployment had risen to its highest level on record at nearly 27%.