COMPANY COMMENT: Tribunal pass does little to repair Lewis’s name
The only bullish factor underpinning the value of this scheme is the proposed share buyback announced in May
Lewis’s share price slumped almost 5% on Tuesday despite the National Consumer Tribunal ruling in its favour in the referral brought by the National Credit Regulator. The referral related to Lewis Stores selling extended warranties that run concurrently with manufacturers’ warranties and charging its credit customers a club fee. The regulator may have thought it was on to a sure thing following the tribunal’s recent ruling against Edcon’s club fees, but it wasn’t to be. The majority on the tribunal found that the club contract was separate from the goods contract. As for the extended warranties, remarkably the tribunal found these did not contravene the National Credit Act. The compulsory nature of these fees and the fact they are charged at well above market rates (given the 1% claims ratio) seems not to have concerned the tribunal. The National Credit Regulator is appealing against the decision. So, Tuesday hardly seemed the right time to announce a multimillion-rand share award t...
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