HomeChoice International Prospers in Difficult Circumstances

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SIMON BROWN: I’m speaking with Sean Wibberley, CEO of HomeChoice International. The results for the full year ending December show a revenue increase of 20.6%, HEPS up by 27.3%, and a dividend boost of 16.9%.

Sean, thank you for taking the time to join me. I’d like to start with your retail sales business, which is perhaps the traditional core of your operations. Revenue there rose by 8.3% to R1.3 billion. It’s still, what, a third of your overall operations, yet it’s performing well in a challenging consumer environment?

SEAN WIBBERLEY: Thank you for having me. The retail sector has undergone a significant turnaround in the past few years. Last year, it returned to profitability, with the bottom line, the PPT, increasing by about 85% to R50 million. This turnaround has been driven by a notable enhancement in the quality of customers attracted through new credit models and an expansion into small-format touch-and-feel showrooms. We’ve grown our showroom count to 37 last year, with plans to expand to 60 this year, and ultimately to 100 in a couple of years.

For the first time in HomeChoice’s history, customers appreciate the opportunity to physically interact with the products instead of solely relying on catalogues or online shopping. This has led to great engagement through that channel, and we’re thrilled about it.

SIMON BROWN: From what I gather, these touch-and-feel showrooms are an intriguing concept that you’ve introduced. They likely enhance the selling process. How many products can you fit into those relatively small spaces?

SEAN WIBBERLEY: Indeed, they are small-format showrooms. We began this showroom strategy a few years ago, initially using large formats to cover a broad range of products. Now, our small-format showrooms are about 250 square meters, achieving four times the trading density. Customers enter, and we showcase seasonal items—like our blankets. They can touch, feel the quality, and see the patterns.

We display various bedrooms in different styles, allowing customers to see a curated setup before ordering online or through an in-store assistant. The products are then delivered a few days later for collection at the showroom.

SIMON BROWN: The major growth area is Weaver Fintech, which is relatively new for you. Let’s start with PayJustNow. It seems people are starting to become familiar with it. You’ve partnered with renowned brands and are seeing excellent adoption.

SEAN WIBBERLEY: Yes. The buy-now-pay-later trend, which began abroad a few years back, has really gained traction in South Africa. The adoption rate for PayJustNow is impressive, with over 100,000 new customers joining each month. Word-of-mouth communication is driving this viral spread; customers are excitedly sharing this smart shopping option with friends. They can pay a third upon purchase, a third a month later, and the final third on their next payday. There are no additional costs for consumers, as they simply divide their total by three. It’s truly a no-brainer.

This viral adoption allows us to integrate new customers into our ecosystem, leveraging their digital data to cross-sell our other financial products, including lending and insurance.

SIMON BROWN: What stood out to me is that while much of the buy-now-pay-later model has been online, you’re also offering it in physical stores, like at Pick n Pay Clothing Hypermarket for appliances, etc.

SEAN WIBBERLEY: That’s correct. At stores like Game and Cape Union Mart, customers can sign up for PayJustNow using their app, linking their debit or credit card to the platform. Then, at checkout, they simply scan the PayJustNow QR code to complete the transaction and leave with their purchases.

SIMON BROWN: I understand. The other aspect is FinChoice, which offers short loans. You mentioned it’s akin to having a credit card on your smartphone. They also provide longer loans and funeral cover—how’s that division performing?

SEAN WIBBERLEY: Absolutely. FinChoice has been operational for 18 years and is considered an ‘adult’ this year. Our MobiMoney product accounts for about a third of our disbursements in very short-term loans—typically three months. Customers can access this solely via their smartphones.

We also provide six-, 12-, 24-, and 36-month loans, which are more personal loans for longer terms and larger amounts designed for our responsible customers. We implement a strategy to progressively guide customers through our product lifecycle to ensure they engage responsibly with credit.

In this area, we leverage our PayJustNow customers to offer them credit, as well as our funeral and personal accident policies.

SIMON BROWN: What’s the status of bad debts? There have been numerous reports suggesting a slight improvement in the consumer landscape recently, but times have been tough for South African consumers for several years.

SEAN WIBBERLEY: That’s true. One of the advantages in our business is that we serve as a relatively short-term lender compared to our peers. Our acquisition products for first-time credit customers typically have durations of three to six months. This allows us to address any emerging bad debtor pockets more swiftly, whether due to macroeconomic factors or miscalculations in our scoring models. Additionally, we are able to pivot quickly as the market tightens, which can affect our risk metrics.

While longer-term lenders might struggle with managing customers over several years, we can adapt more readily. However, it is true that the South African consumer has faced challenges, from Covid to rising interest rates, along with discussions of a potential two-percentage-point VAT increase. I’ve been asked a lot about how we navigate these macro issues—and while we don’t ignore them, we focus on understanding our customers, their payment behaviors, and their changing affordability, adapting our marketing and offerings accordingly.

SIMON BROWN: As you mentioned, this ability to respond quickly, along with your knowledge of customers transitioning from PayJustNow to FinChoice, is key.

We’ll wrap it up there. Thank you for your time, Sean Wibberley, CEO of HomeChoice International.

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