Furniture Mart 'unbundles' to form new entity

WANETSHA MOSINYI
Staff Writer | Thursday January 22, 2009 00:00

 

Bonus Stores is a wholly-owned Botswana subsidiary of the group and has been dormant since its registration. 

But in a circular to shareholders on Tuesday, the directors of Furniture Mart said it is intended that Bonus Stores will also change its name.

The company will hold an Extraordinary General Meeting (EGM) to seek approval from its shareholders next week Friday on the premises of Cash Bazaar Holdings in Gaborone.

'The proposed restructuring will achieve standardisation of the group's holdings and allow the company to act solely as a holding company,' the circular says.

Some of the reasons advanced by the directors are that restructuring the Botswana trading operations to be similar to those in Namibia, Zambia and South Africa will result in a separate and distinct entity.

'The restructuring allows for a uniform and streamlined management structure with respect to the different trading operations in each country, which will in turn enhance accountability,' the statement says.

It is expected that the increased efficiencies realised by the restructuring will impact on the profitability of the company in the long-term.

However, the company says in the near-term, the effect of the restructure will be negligible and the overall profitability of the group will remain unchanged.

It is anticipated that the transfer will take place on or about 31 January 2009.

By moving the Botswana trading operations out of the group and into a subsidiary, Furniture Mart is technically disposing of the operations. 

Under the BSE Act, a disposal of this size requires the approval of shareholders in a general meeting by way of a Special Resolution.

Furniture Mart and its subsidiaries presently operate retail outlets spread over four countries, namely, Botswana, Namibia, South Africa and Zambia.

The Furniture Mart Group trades with three brands: Furnmart in Botswana, Namibia and Zambia, and Xtreme in South Africa. Both these brands are aimed at the middle and lower income segments of the market.

The third brand, Home Corp, has stores in Botswana and Namibia.

The Home Corp business model is designed to offer quality goods at discounted prices to the middle and higher income segments of the market.

Over the last five years, the company has achieved significant growth in both sales and profits.

The majority of the growth in sales has been achieved through a combination of expanding into South Africa with Xtreme and through the opening of new Home Corp brand stores.

The first Xtreme and Home Corp stores have now been trading for about three years.  Based on the financial performance for the first four months of this financial year, the Board of Directors of the Group says they are confident that both business models are profitable and are capable of being rolled out on a large scale.

Furniture Mart Limited was incorporated in Botswana in 1974 and was listed on the BSE in December 1998.