Luxe looks online to boost sales as more stores face closure

Luxe, the owner of Arthur Kaplan and NWJ Jewellers brands, plans to shut more unprofitable stores and invest in online platforms in an attempt to boost sales after reporting another loss in the year to end-February.

Formerly known as Taste Holdings, the company has repositioned itself as a luxury retailer after exiting the crowded fast-food market in SA, where the competition is intense and consumer spending is sluggish.

However, the luxury retail market felt the pinch of Covid-19 through lower sales, though Luxe fared better in the second half of its financial year, boosted by the opening up of the economy.

The coronavirus-induced acceleration in digital shopping also boosted sales, though these came off a low base.

Online sales grew 236% in the year to end-February, with same store sales up 174%, the company said in a statement on Wednesday.  Still, group revenue was down 21% to R362m due to the first hard lockdown.

Overall sales, which includes stores operated by franchisees, dropped 20% to R377m on a combination of the fallout of the pandemic and the closure of underperforming stores.

NWJ closed six stores during the review period, Arthur Kaplan one and other stores were closed for renovations.

“As we navigate this period of uncertainty we continue to explore and evaluate organic and new business opportunities,” CEO Duncan Crosson said in a statement. “Given that the recovery in consumer spending is likely to be gradual, there will be a comprehensive reassessment of our geographical footprint and store network and we will refurbish stores and close non-performing stores that do not meet our investment criteria,” Crosson said. 

“Consumer spending is expected to remain under pressure in the medium term owing to the effects of SA’s prolonged economic downturn, fuelled by the negative impact of the pandemic,” he added

Luxe, which sells luxury watches and jewellery to middle to high-end income consumers through its operating businesses, sees online shopping as an important driver of sales while the outlook for brick and mortar was still uncertain, given the renewed surge in Covid cases. Luxe is also looking to enhance partnerships with other luxury brands to drive sales.

The headline loss per share from continuing operations was at 60.2c, in line with a loss recorded a year ago. The share price closed 4% lower at R1.15 on the JSE, valuing Luxe at R25.5m.