"The response to the launch of new and exclusive merchandise ranges during the latter part of October has been encouraging.
"Our stores are well stocked with competitively priced merchandise for the Christmas season, supported by strong marketing and promotional campaigns," chief executive, Johan Enslin said.
Consumer spending has been boosted by decade's-low interest rates and a cautious return to credit spending and according to Stats SA's latest figures, retail sales surpassed growth expectations for August 2011 showing an increase of 7.1% year on year (y/y).
Economists, however, have questioned the sustainability of this momentum, saying retail spending was likely to rise at a moderate tempo towards year end, constrained by weak labour markets, rising price pressures and low consumer confidence.
Lewis Group on Monday reported increased headline earnings per share of 13.9% to 378.7 cents in the six months to September, lifted by an improvement in the gross profit margin from 35.1% to 38.5%, which Enslin said was the single biggest driver during the period under review.
Though the group described trading conditions as "challenging" as a result of inconsistent sales patterns during the period, revenue increased by 6.7% to R2.3 billion, while merchandise sales increased by 3.2% to R1.1 billion; operating profit increased 6.3% to R498.5 million.
"Trading was impacted by the shift in the timing of the Easter holidays in April, the local government elections in May and industrial action across several sectors of the economy," Enslin said.
The company imports 20% of its furniture on a direct basis, out of countries like China, Malaysia and South America, while the balancegets sourced locally.
Credit sales increased from 71% to 73% of total sales owing mainly to targeted customer promotions and the launch of new furniture and appliance ranges, Lewis Group said.
The company, which listed in 2004 declared an interim dividend of 172 cents per share, an increase of 10.3% from previously.
Looking ahead, Lewis Group plans to keep it local as it eyes growth from 593 to 700 stores.
"In the first-half we opened 16 stores, and we're now planning to open between 15 and 20 stores in the second-half. In terms of location, there will be a nice balance between rural and urban SA," Enslin told I-Net Bridge/BusinessLIVE.
He added that that in the short and medium term the company would not be expanding into the rest of Africa.
"Credit businesses and reliability of credit information further into Africa is still a problem," he added.
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