The company is bolstering its cash collection ability by building a call centre in the same building as its head office in Cape Town, while tightening granting of credit to struggling consumers.
"Every month we decide who we mail our catalogue to, and if your record is impaired, you don't get the catalogue," HomeChoice CEO Shirley Maltz said yesterday. Only 45% of new applicants for credit actually succeeded, she said. "We grant credit to about 80% of our existing customers."
Despite the tighter credit metrics, retail merchandise sales still increased 10.6% in the period. HomeChoice said this reflected "the benefits of continued product innovation".
Its merchandise is sold in five countries either online, via a call centre or through mail orders, which suffered as a result of the South African Post Office's strikes last year and this year.
The average loan duration for its homeware merchandise - which includes bedding and kitchen utensils - rose to 19.6 months in the six months ended June, from 18.9 months a year ago. The average loan balance also rose, to R8,466, from R7,804 in June last year.
Through loan provider FinChoice, the company will maintain its strategic focus on short-term, low-value personal loans. The maximum loan term is 36 months, with only about 6% of loans reaching the maximum duration. FinChoice will expand its product range to include insurance this year.
Loan disbursements jumped 22% to R542m in the period, with existing customers receiving 73% of the disbursements. The total loan book was R1.9bn, with impairments of 9%. Provision for bad debts is double that.
"Credit conditions remain challenging and the group continues to apply strict criteria and conservative provisioning policies," said HomeChoice.
The company would continue to pay particular attention to cash collections, said Maltz.
For more than two decades, I-Net Bridge has been one of South Africa’s preferred electronic providers of innovative solutions, data of the highest calibre, reliable platforms and excellent supporting systems. Our products include workstations, web applications and data feeds packaged with in-depth news and powerful analytical tools empowering clients to make meaningful decisions.
We pride ourselves on our wide variety of in-house skills, encompassing multiple platforms and applications. These skills enable us to not only function as a first class facility, but also design, implement and support all our client needs at a level that confirms I-Net Bridge a leader in its field.
Go to: http://www.inet.co.za
