Industrial Reporter

FURNITURE and appliance retailer Ellerines is planning to expand both locally and abroad.

The group, which is known for its cautious approach to expansion, now wants to increase the number of FurnCity outlets by 13 to 150 and roll out two Wetherlys in Spain by the end of next year.

Ellerines is looking at getting growth out of the newly acquired Wetherlys and FurnCity, which focus on the upper middle class.

Although Ellerines was not shy to roll out new stores, its CEO Peter Squires said the focus for the current financial year was to consolidate the acquisition of Wetherlys.

Squires said the group performed well for the year to August. Turnover was up 7,8% to R2,18bn and operating profit jumped 12,8% to R344m. Attributable profit increased 16,1% to R247,2m. He said the closure of about 200 stores in the sector and the reduction in interest rates improved trading conditions.

A few years ago there was concern that going into the "mass middle market" with FurnCity could backfire as the sector was already considered by many analysts to be overcrowded.

Squires was happy with the way FurnCity was performing. He said the chain was increasing its market penetration in its key target markets.

FurnCity pushed up the number of outlets from 109 to 137and rolled out three superstores in the year to August. These new stores included the launching of the FurnCity chain in Botswana and Zambia.

Aside from FurnCity, the acquisition of Wetherlys added another dimension to the group.

Ellerines now had access to an affluent consumer base that bought furniture for cash.

Wetherlys financial director Rob Brickhill said that, as a listed company, the lifestyle chain needed to balance out its corporate and operational responsibilities.

Now that Wetherlys was in the Ellerines stable it was well positioned to expand at the rate it had always wanted to, he said.

Brickhill said that aside from opening new stores in Spain, Wetherlys would also develop a distribution centre in that country.

Although Wetherlys is going to operate separately from Ellerines, Squires said the internal structure of the company would be simplified during the year.

Ellerines' share price closed 5c lower at R27,20 yesterday, with 205978 shares trading in 47 deals.

Oct 22 2003 07:12:50:000AM Larry Claasen Business Day 1st Edition