HomeChoice International reports 24% profit growth

HomeChoice International, which sells homeware and loan products to predominantly low- to middle-income consumers, on Tuesday reported a 24% increase in full-year headline profit, boosted by its financial services division.

The company is looking to capture market share in the unsecured lending market, which is dominated by players such as Capitec Bank. It uses social media platforms such as Facebook and Instagram to market its product range.

The group sells appliances and electronics through call centres and direct marketing on credit to mostly customers with an average monthly income of about R10,000. Its financial services division, FinChoice, offers unsecured lending via a zero-rated mobile app, which means the company picks up the users’ data costs.

FinChoice loan disbursements rose 73.8% to R3.3bn in the year to end-December, driven by demand for consumer credit facilities. The market share of the FinChoice unsecured lending book rose 12 basis points to 1.17%. The growth has been driven mainly by repeat business, with 81% of disbursements made to proven existing customers.

However, retail sales declined 4.8% to R1.7bn, reflecting the tightening of credit and a lower level of customer acquisition. Sales were negatively affected by the knock-on effects of the July civil unrest in KwaZulu-Natal and parts of Gauteng and the Western Cape taxi violence which led to high levels of absenteeism in contact centre and collections teams, the company said.

Headline earnings per share, the main profit measure that excludes one-off items, rose to R2.04, from R1.64 a year ago. HomeChoice International declared a final dividend of 20c a share, after no dividend was declared a year ago.

Correction: March 16 2022
An earlier version of this article called the group HomeChoice, when its HomeChoice International.

mahlangua@businesslive.co.za