Bad debt rise at BrightHouse

[ukaviator]

Bad debt charges rose for the third consecutive year at rent-to-own retailer BrightHouse, hitting £23.7m for the year ending March 2013.

This was a 10% increase on the £21.5m bad debt charge the firm incurred in 2012, according to a results statement for BrightHouse Group

that said bad debt fell from 8.1% to 8% of total turnover in the 12 months to March 2013.

 

But a rise in turnover meant on that basis that bad debts stood at £23.7m for 2013 based on annual revenues of £296.9m,

a rise on the £21.5m of bad debts incurred in 2012 from revenues of £266.4m.

 

The rise could in part be attributed to increased customer numbers, which climbed to 246,800 in the last year from 227,200 in 2012.

 

BrightHouse also opened 27 new stores during the year to take its total number of stores to 280.

 

The company said demographic analysis had revealed the potential for up to 450 stores in the UK, though there is no timeline for this expansion.

 

In a trading statement, the business said 2013 had been a “challenging environment”

due to the pressures on customers from high inflation, low wage growth and uncertainty over employment.

 

“In addition, the government’s much heralded changes to the welfare system have increased uncertainty for a significant portion of BrightHouse customers

who are completely or partially reliant upon benefits,” the firm said.

 

“This environment leads consumers to be cautious when purchasing large ticket items for the home

and reluctant to extend themselves when signing up to a three-year credit agreement.”

 

Despite the rising bad debt charge the firm, which sells household goods to customers with poor credit histories paid for through weekly instalments,

posted rising profits and earnings before interest, tax, depreciation and amortisation (EBITDA).

 

The Group made pre-tax profits of £8.3m for the year, down from £12.4m the previous year,

while EBITDA grew by 10.8% to £49.4m in 2012/13 from £44.6m the year before.

 

Leo McKee, chief executive of BrightHouse, said:

 

“BrightHouse has delivered another year of growth in what has been a tough retail environment.

 

“We have continued to focus on delivering exemplary service and meeting the evolving needs of our customers. Our focus on the customer has helped us deliver these results.”

 

Link: http://www.credittoday.co.uk/article/15826/online-news/bad-debt-rise-at-brighthouse