Lewis, the traditionally downmarket furniture chain, said the deal would help it expand into the most affluent band of South African consumers, defined as living standards measure (LSM) nine and 10 by the South African Advertising Research Foundation.
"UFO is recognised as a luxury brand with a value offering to the upper-consumer spectrum, namely LSM 9-10+. The business was established in 2004 and currently more than half of its stores are located in Gauteng," Lewis said on Thursday.
"The acquisition will enable Lewis Stores to achieve improved economies of scale and provide a platform to penetrate new market sectors through a wider, more exclusive product range.
"Importantly, Lewis Stores is of the view that the acquisition will diversify its offering by increasing its cash-to-credit sales ratio and facilitate access to a higher income customer market segment."
UFO's net assets were R66.4m and its attributable profit was R21.9m for its financial year to end-February. Lewis said it would withhold R16m of the R320m agreed price until this net asset value had been confirmed.
Source: BDpro
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