Homechoice Delivers Strong Growth Amidst Difficult Retail Environment

HomeChoice International PLC (the Group), a leading provider of innovative Retail and Financial Services products to a growing female mass market customer base in southern Africa, today announced solid results for the period ended 30 June 2018. Headline earnings increased by 16.1% to R260 million and HEPS increased by 14.7% to 249.6 cents, continuing its growth trajectory and pleasingly ahead of the five-year annual compound growth in HEPS of 13.2%.

Chief Executive Officer South Africa, Shirley Maltz, commented: “Despite the current challenging retail environment, we are seeing the benefit of our continuous investment into improving our customer experience and accelerating our digital transformation. Credit extended via digital channels increased by 54.7% to R792 million and now accounts for 39.1% of total credit.”

During the period, the Group also made a R37 million investment into a new distribution centre in Gauteng. This will substantially reduce delivery times for customers and, combined with the rollout of showrooms, will enhance the purchasing experience for HomeChoice customers. Investment in key data and analytical skills as well as fraud and technology platforms will continue to accelerate digital adoption by the Company’s customers and will drive growth.

Financial results

Group revenue growth substantially outperformed its peer market, increasing by 16.1% to R1.5 billion. Retail sales increased by 18.9% and FinChoice, the Financial Service offering, achieved a 30.0% increase in loan disbursements. Operating profit increased by 14.4% to R374 million.

Maltz said: “Pleasingly, we continue to acquire more than 20 000 new customers per month, contributing to continued growth in our customer base.”

The Group declared an interim dividend of 95 cents, up 15.9% on the previous year. A dividend cover of 2.6 times was maintained.


“We have made notable progress in our transformation to a digital department store,” said Maltz.

Retail sales increased by 18.9% and EBITDA by 17.3%, driven by strong volume growth in homeware textiles and the roll-out of further external brands which proved popular with customers. The group now sells more than 100 external brands and is well advanced on its journey to become a digital department store. Digital continues to be the fastest growing channel, up 46.7%, and now represents 18.5% of Retail sales (June 2017: 14.8%).

“Customer engagement through digital, especially mobi channels is growing rapidly, with 60% of Retail digital sales from mobile phones.” said Maltz.

The Retail business has embarked on a strategy to roll out showrooms in key locations. A second small-format showroom was opened in Maponya Mall in Soweto during May 2018 and HomeChoice is advanced with the development and construction of three more showrooms, one being a flagship on Rissik Street, Johannesburg.

Financial Services

Financial Services grew revenue by 13.0% and EBITDA by 15.9%, supported by a 30.0% increase in loan disbursements, as well as good growth in insurance revenue and strong adoption by customers of our mobi-wallet concept, MobiMoneyTM. A notable 86% of loan customers are registered for FinChoice’s digital platforms, underscoring its status as a leading FinTech services provider in the mass market.

“FinChoice is a rapidly-growing FinTech platform,” explained Maltz. “Our customers are highly engaged on the platforms; of all loan transactions in the period, 78% were concluded digitally, one-third outside of normal trading hours.”

More than 25% of the active base has activated and engaged with MobiMoneyTM, which is an innovative digital-only credit facility product which was introduced at the end of 2017. It provides a gateway for further products and value-added services to be offered to customers via smartphones.

The relatively new insurance business continues to show strong growth. This vertical represents an attractive growth opportunity to diversify income and increase customer share of wallet.


The Group continued to expand a quality credit book with gross trade and loan receivables increasing by 22.2% to R3.3 billion. Group debtor costs growth of 18.7% was marginally above revenue growth of 16.1% and remains within the Group’s acceptable risk tolerances. Non-performing loans (NPLs) declined in both divisions, while NPL cover was bolstered by increased provisions following the adoption of IFRS 9.

Cash generation

Cash generated from operations increased by 37.9% to R240 million, driven by good cash collections, a reduction in loan terms and actively managing cash requirements in working capital.

“The strong cash generation capability of the business is evidenced by the fact the Group has managed to grow a credit book of more than R3.3 billion while maintaining a net debt to equity ratio (excluding property) of 20.3%,” Maltz said.


“We will continue to position ourselves as a leading digital partner in the mass market, with an omni channel offering that provides an attractive and seamless retailing experience across all channels,” concluded Maltz.

The Group’s established digital platforms and loyal customer base offer enormous opportunity to extend its product ranges and service offerings. The Group continues to see increasing digital adoption by customers and will further develop its omni-channel offering by opening showrooms to enhance this growth trajectory. In the short term, continued tough trading conditions will be navigated.

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