The Lewis stores once ubiquitous in small towns are slowly disappearing – but UFO furniture stores will be spreading fast
- In the last year it closed a net 19 stores under the Lewis and Beares brands, the listed Lewis Group said on Wednesday.
- Those brands target lower-end consumers, often in more rural areas of South Africa.
- In the current financial year it plans to open a net 15 new stores – of which many will be United Furniture outlets – a high-end, urban brand.
In the year up to the end of March it closed a net 19 stores under its Lewis and Beares brands, the listed Lewis Group said in annual results on Wednesday.
That is not counting "smaller format" Lewis stores that replaced larger counterparts as the brand shrinks by slow degrees.
But in the current financial year it plans to open more stores than it closes, with a net target of 15 new outlets.
Of those, five to 10 will be under the United Furniture Outlets (UFO) name, a company the Lewis Group acquired for R324 million in February.
All the UFO stores are due to be opened in upmarket shopping malls.
Where Lewis stores are scattered all over rural South Africa, UFO was started in Sandton, Johannesburg, and more than half its stores are still in Gauteng. Few of the remainder are anywhere smaller than Polokwane.
While Lewis sells bedroom suites at monthly instalments of R270, UFO sells R60,000 sets of leather recliners.
Even with the rapid expansion, UFO will still be a fraction the size of Lewis, with fewer than 50 stores compared to, currently, just under 500.
"They're certainly spreading their customer exposure to not be quite as exposed at lower end and trying to get a little more urban exposure as well," says analyst Mark Hodgson of Avior Research. "But it's a diversification strategy; they're not giving up on their origins completely."
During the year 65.7% of the Lewis Group's sales were on credit, its figures show.
In March a group of retailers won a court battle against the requirement that consumers must show payslips or bank statements to qualify for store credit.
Yet Lewis expects its credit sales to decline slightly over time.
As credit regulation squeezes profit margins on credit, Lewis is moving towards being more a retailer and less of a financier for its customers," said Hodgson.
- e.tv can't compete with the popularity of SABC's local dramas – and its DStv competitor has a long way to go
- A 30-year-old American who still lives with his parents is locked in a legal battle over them trying to kick him out — here's why he thinks they're being absurd
- 20 space rocks are going on auction in Johannesburg, and one could fetch as much as R560,000
- This is what beer costs in every province – and the Western Cape and Gauteng are by far the most expensive