Lewis delivered strong FY26 results, supported by aggressive store rollouts and continued growth in the debtors’ book, which drove robust merchandise sales. The Traditional segment had another standout year, with strong space growth and store openings, which boosted the top line. Best Home & Electric accounted for the largest share of new store openings within the segment, and its smaller average store format contributed to an improvement in trading densities, which we estimate at c. R41 053m2.
While Speciality delivered solid revenue growth, the rapid expansion of the Real Beds brand and the continued underperformance of the UFO brand weighed on profitability. Since FY22, UFO has continued to close stores, a trend we attribute to the declining contribution of cash sales. Rightsizing the brand should improve margins and help boost trading densities, given UFO’s large average store size. We calculate that Speciality’s trading densities have increased to c. R18 637m2.
The gross carrying value of the debtors’ book continues to grow, but its increased size may explain the slight deterioration in book health observed in FY26. The collection rate declined from 78.9% to 78.1%, with non-performing accounts increasing to 5.2% of total accounts, while arrears account for 25.4% of gross carrying value. While these metrics have regressed compared to the prior year, they remain at the lowest levels seen in the last seven years.
Concerning LEW’s legal battle with PPH over the SHP Furniture acquisition, LEW succeeded in its Constitutional Court bid to intervene in the acquisition proceedings, having raised credible, merger-specific competition concerns. The Competition Tribunal has scheduled a hearing for June 2026.