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Sales at furniture retailer Ellerine, which is consolidating its chains as part of cost cutting, had fallen even before taking inflation into account, owner African Bank Investments Limited (Abil) said yesterday.

August 19, 2008

By Tom Robbins

Sales at furniture retailer Ellerine, which is consolidating its chains as part of cost cutting, had fallen even before taking inflation into account, owner African Bank Investments Limited (Abil) said yesterday.

Ellerine sales fell 4.3 percent in the half-year to June from a year ago, after it tightened lending criteria to bottom-end customers, Abil said. Store inflation was 10.4 percent.

Abil said it would restructure management at bottom-market chains Ellerines, FurnCity and Town Talk into one team, “with a view of rationalising the brands into one”. It planned to do the same with mid-market chains Beares and Lubners.

Abil chief executive Leon Kirkinis said the strongest brands would be retained.

It is consolidating top-end chains into the Wetherlys brand.

Senior and middle managers would be retrenched, Kirkinis said. “It is not a huge number.”

Some stores would be closed and costs would be saved as duplication would be ended.

Kirkinis said Ellerine had granted credit too freely to low-end customers before Abil bought it. This segment had the poorest sales performance due to the tighter credit criteria.

Bottom-end sales were down by 11.6 percent, top-end chains grew sales 2 percent, while sales were flat at middle-income brands, Kirkinis said.