Industrial Reporter

FURNITURE and appliance retailer Ellerines expects headline earnings a share to increase in excess of 30% when it reports its results for the half year to February.

Andisa Securities retail analyst Evan Walker said while its acquisition of luxury lifestyle retailer Wetherlys in the past year may have contributed to growth in earnings, trading conditions had been strong for Ellerines.

Along with the drop in interest rates in the past year, the decline in prices of imported goods stimulated demand in the latter half of the past year.

The furniture retail sector was helped by the closure of about 200 stores over the past two years, increasing the value of the remaining outlets.

Today's announcement by Ellerines followed that made by the soon-to-be listed Lewis Stores, which said it grew sales, excluding acquisitions, 23% in the final quarter of last year.

The expected increase in earnings will be a turnaround from the 36% drop in attributable earnings to R142m for the six months to February 2002.

Walker said Ellerines also stood to benefit from locking in customers at a higher interest rates for the next two years, while rates were coming down.

The R507m acquisition of Wetherlys, which sells luxury goods , was expected to add a further R400m to turnover.

As these figures have not been reviewed or reported on by the company's auditors, Ellerines' advised shareholders to exercise caution when dealing in the group's shares.

Turnover for Ellerines was up 7,8% to R2,18bn and operating profit jumped 12,8% to R344m for the year to August. Attributable profit increased 16,1% to R247,2m.

Ellerines closed up 1,64% at R31 with 592629 shares traded in 293 deals.
Mar 18 2004 07:10:18:000AM Larry Claasen Business Day 1st Edition