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JSE listing to bring out Wetherlys' shine
FURNITURE RETAILING
FURNITURE retailer and manufacturer Wetherlys will raise R46-million when it lists in the JSE's stores sectors on November 27. The company, which expects to debut on the JSE with a market capitalisation of R200-million, has grown out of a small furniture factory started by brothers Nicholas and Stephen Davies, both BCom dropouts, in their garage in Auckland Park, Johannesburg, in 1973. Their first shop was opened later that year in Craighall Park and was run by their mother, Anita. Stores in Bryanston and Rosebank followed. The turning point for Wetherlys came in 1985 after the brothers took in three partners and pioneered the decorating warehouse concept in SA. Chief executive officer Nicholas Davies says: "Because warehouse space is much cheaper than retail space, we were able to display a larger range at better prices than most furniture shops." To keep costs down, Wetherlys has eliminated the middleman in its business. It produces its own furniture at its Maraisburg factory and exclusive ranges are made by suppliers in SA or in Italy, Thailand, India and China. Because it mainly operates on a cash basis, its strong cash flow allows it to take advantage of settlement discounts from suppliers. Wetherlys has three warehouses in Gauteng and one in Cape Town. After the opening of its Pretoria warehouse on Thursday it has more than 15 000 square metres of retail space. The company has secured a number of large contracts to furnish hotels, restaurants, game lodges, time-share developments and offices. Over the past five years earnings have grown by a compound rate of more than 40% a year and sales have grown 22%. The group forecasts sales of R100-million in the year to February. Davies expects the launch of the Wetherlys Buyers Guide in March to be a major fillip for growth. Financial Director Willie Ashton says the low overheads of catalogue marketing are expected to significantly boost Wetherlys operating margins. The sales will be handled by warehouses in regional hubs. A new thrust into the office market is being launched with a more "homely" range and Wetherlys is also gearing up to cater for the growing home entertainment and outdoor markets. Through its listing, the company will raise R36-million through a private placement and R10-million in a public offer of 5-million shares at 200c each. Ashton says the listing will help the company to finance its warehouse expansion and expected growth. The funds raised will wipe out R6-million in property debt and be used to upgrade machinery. Top of page
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