Leading furniture group, Furnmart registered positive revenue growth in their January year end results. However, their overall performance was dampened by the Group’s respective debtors’ books which reflect that there is a deteriorating credit climate in the region. As a result, their profitability is lower, mainly due to higher impairment provisions and lower income yields earned from the debtors’ books. These have had a recorded negative impact on overall profit.
Furnmart, through its Home Corp store has operations in Botswana, Zambia and Namibia with a distribution centre in South Africa. The leading furniture group’s unaudited interim results for the six months ended 31 January indicate that revenue amounts to P655 million, an increase of 9 percent on last years’ profit.
“The trading environment, particularly in Botswana and South Africa, remains difficult,” said Furnmart.
“Profits were also negatively impacted by the start-up costs of new stores, higher depreciation charges and interest expenses, resulting in profit after tax that is materially lower compared to the previous year.” The increased depreciation includes the write-off of software expenses subsequent to completion of the roll-out of the new IT system in Botswana, Namibia and Zambia. The higher interest charge is a result of increased long term funding, which has been raised for future growth. The Group opened four new Furnmart stores during the period under review.
One Home Corp store and one Furnmart store are planned for South Africa in May 2015. The Group is nearing completion of the roll-out of their new IT platform. All stores with the exception of South Africa have been converted to the new system. The South African stores will be converted by May 2015. The Group will benefit from this investment through enhanced efficiencies in areas of in-store operations, reporting, credit follow-up and credit granting.
Difficult trading conditions in the credit retail market are expected to continue for the remainder of the year. However, management will continue to focus on improving collections, improving credit granting processes and containing costs through emphasis on productivity and improved efficiencies. Despite the adverse trading conditions the Group will continue its expansion plans in line with its strategy of diversification of country risk. Ongoing rationalisation in the industry increases the potential to obtain prime sites in appropriate towns and villages. Despite the growth in the company’s revenue, Furnmart’s stock on the Botswana Stock Exchange has largely remained docile.