Debtor costs for the six months to September rose 16.7% due to higher bad debts and an increase in the impairment provision from 22.3% to 24.1%.
"Customers are making an effort to come in and pay their accounts, but they're not in a position to pay full monthly instalments, so our impairment provision increased by over R200m over the last six months," CEO Johan Enslin said at the results release yesterday.
The furniture retailer's shares slid as much as 7% as it reported a 13% drop in first-half profit, with customers in the mining and farming sectors under particular pressure.
Revenue gained 8.3% to R2.8bn in the six months ended September. The shares closed 0.9% lower at R61.30.
"Things have been tough for a really long time ... the consumer has never been under pressure for this long. Seven years ago, we declined about 7% of credit applications, for the last two years we've been declining 41%," Enslin said.
The group's adoption of the National Credit Regulator's affordability assessment regulations during July proved challenging for consumers.
"A lot of customers in the formal sector when asked to bring in their three pay slips were quite amazed by these changes. They didn't have those available and we had to send them away - in time this will get better.
"Some people in the informal sector are unbanked and don't channel all their funds through bank accounts. It's going to be an uphill battle to try and get those customers to become banked," Enslin said.
Earlier this year, two of the group's subsidiaries were referred to the National Consumer Tribunal by the National Credit Regulator over breaches of the National Credit Act.
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