24 March 2021

Digital acceleration and robust cash management amid covid impact

  • Cash on hand up >100% to R415 million (2019: R80 million)
  • >50% of transactions on digital platforms
  • 270 000 new customers acquired
  • Group revenue down 6.0% to R3.3 billion
  • Retail sales down 8.1% to R1.8 billion
  • Loan disbursements curtailed by 15.3% to R1.9 billion
  • Operating profit decreased by 60.2% on impact of Covid-19 and lower gross profit margin
  • Headline earnings per share down 62.3% to 164.2 cents

HomeChoice International PLC is the largest home-shopping retailer in southern Africa, selling homeware and financial services to the urban, middle-income mass market, with a total active customer base of 905 000 loyal, primarily female supporters. The Group has serviced the expanding urban African female middle-income mass market for more than 35 years.

The Group today announced a set of results that was significantly impacted by Covid-19 and the actions required to conserve cash, protect the book, protect staff, and further accelerate its digital platforms. Executive Chairman, Shirley Maltz, said: “The COVID-19 challenges are evident in our financial results. I believe the decisive action taken in mid-March to cut loan disbursements by R700 million, curtail access to new credit, and speed up customers’ adoption of digital interaction, effectively managed the risk of the business and conserved cash which improved from R80 million to R415 million by December 2020. “

We were disappointed with the drop in gross profit margin to 44.9%, due to price cuts and an 80% growth in lower margin appliances and electronics categories combined with an underperformance in higher margin bedding ranges. We have implemented remedial actions which are already generating a much-improved margin.

Group debtor costs increased by 21.9% to R874 million, negatively affected by COVID. Reduced credit limits, shortened terms and a strong focus on credit extension within stable employment sectors and debit orders payments, improved the vintages for both businesses below pre-Covid levels.

Our balance sheet is strong with a healthy cash balance and a low net debt:equity of 10.7%. Banking facilities were successfully refinanced and upsized to R1.05 billion, leaving unutilised facilities of R655 million at year-end for future growth.

The board has decided to withhold a final dividend, to reinvest in the business and take advantage of growth opportunities as they arise.

Retail digital transformation accelerated while margins disappointed

Retail was affected by Covid impacts and a misalignment in product strategies to drive top-line growth. We acquired 241 000 new customers in the year, with 28% (2019: 8%) of new customers now being acquired digitally and digital sales up 70%, contributing 25% (2019: 14%) of total sales. Monetisation of social media platforms continues with 1 million Facebook followers, 105 000 Instagram followers and 75 000 users on the HomeChoice App. Click and Collect from our 12 (2019: 9) showrooms and 11 (2019: 8) ChoiceCollect containers has increased by 122%, as customers enjoy the increased convenience and flexibility. We have developed a comprehensive recovery plan to improve profitability of the Retail business and anticipate substantial improvement in 2021.

Financial Services’ growth momentum disrupted by Covid-19

Financial Services’ contribution was affected by curtailed loan disbursements and the lower repo rate, elevated Covid-19 related retrenchment and funeral insurance claims and an 11.6% increase in debtor costs. Some 55 000 new loan customers were acquired during the year, market share of shorter-term disbursements (tenure below 36 months) grew from 4.9% to 6.0% and our digital-only, MobiMoneyTM three-month facility increased by 44% to 121 000 customers. More than 90% of repeat business is now conducted online and the growing popularity of this product and our MobiMoney e-wallet functionality will be leveraged to deliver an appealing and convenient financial product range to our customers. Our personal insurance products attracted 42 600 new customers.


“Our customers have shown their resilience during this period and we will continue to focus on delivering exciting products, new merchandise categories and attractive financial services to both new and existing customers”, said Maltz. The group has a defensive business model and a strong cash position with which we will continue to drive the growth momentum in Financial Services and ‘course correct’ the Retail business for continued growth.