JOHANNESBURG (Reuters) - South African furniture retailer Lewis Group on Monday reported a 13 percent drop in first-half profit, sending its shares falling, and blamed slow sales on a struggling mining sector and a drought.
The mining sector in Africa’s most industrialised economy has been hit by low global metal prices and power shortages that have led to shaft closures and job losses. The country is also in the grip of a drought that has seen crop output fall sharply.
“The slowdown in the economy has been tough on us,” Chief Executive Johan Enslin said told Reuters.
Headline earnings per share - the main profit measure in South Africa and strips out certain one-off items - fell to 323 cents in the six months ended Sept. 30 from 373 cents a year earlier.
“Retail trading conditions have deteriorated since July, with the weakening job market and ongoing economic uncertainty in the country limiting prospects for the group’s lower to middle income target market,” the company said in a statement.
Facing a fine for allegedly mis-selling insurance to pensioners as the National Credit Regulator pounces on furniture retailers selling goods on in-store credit, the company last month said it will pay 67.1 million rand ($4.71 million) to customers it had mistakenly sold loan insurance.
Despite the refunds, Lewis will still be challenging the complaint by the regulator and is awaiting a date to appear before the National Consumer Tribunal, Enslin said.
Shares in the furniture retailer were down 4.07 percent at 59.33 rand by 1033 GMT, extending losses since the probe was first announced in July to more than 35 percent.
($1 = 14.2575 rand)
Reporting by TJ Strydom; Editing by James Macharia