NEW affordability assessment regulations have taken a toll on furniture retail group Lewis, which advised shareholders in a trading update on Monday that revenue growth in the December quarter had slowed from the matching period last year.

The group, as well as besides its flagship branded stores owns Beares and Best Home and Electric, said putting these rules in place — which require customers to produce three months’ payslips or bank statements when applying for credit — had proven to be challenging for its lower-to middle-income clientele and affected trading.

Revenue increased 1.1% in the three months to December from the corresponding period last year, while merchandise sales were flat. This is a significant deceleration from the previous comparative period.

Revenue growth for the December quarter in 2014 had been 8% and merchandise sales growth 12%, "boosted by the group’s acquisition of the Beares chain", CEO Johan Enslin told Business Day on Monday.

In November 2014, Lewis bought the Beares brand and 63 stores from Ellerine Holdings, the struggling subsidiary of the troubled African Bank Investments group.

It acquired a further 25 stores bearing the Beares and Ellerines brand in Botswana, 10 in Lesotho, 21 in Namibia and six in Swaziland that were absorbed into the group last month.

The newer purchases did not do much to offset losses from the affordability regulations that came into effect in September.

Mr Enslin said the new credit applications could not be started without three months’ pay advices or bank statements; hence the new regulations were not reflected in the company’s credit application decline rate.

Lesiba Mashapa, company secretary at the National Credit Regulator, said this was expected to improve as consumers got to grips with the new rules.

"Some credit providers’ credit adverts also now specifically require consumers to bring proof of income when they come to apply for credit," he said. "Communication should not be a problem for credit providers.

"The credit providers should ensure that consumers provide proof of income and … accurate disclosure of their living expenses. Over time, consumers will know what is required when they apply for credit."

The National Credit Regulator has been running workshops for credit providers on the regulations since late last year.

Mr Enslin said the group was not exploring new sources of revenue, as it saw the regulations as a short-term adjustment.

"Lewis management believes that the new affordability assessment guidelines will impact the business in the short to medium term, and should improve as potential customers become aware of the requirement to provide bank statements or pay advices," Mr Enslin said.

Shoprite spokeswoman Sarita van Wyk said its furniture division was declining more credit applications than before as a result of the new regulations.

"We cannot provide any financial information at this time due to the company being in a closed period in anticipation of its interim results announcement in February," she said.

For Lewis, these challenges came along with weak demand from consumers, unemployment, drought, and the mining sector downturn, affecting sales during the full nine-month period to December.

It posted marginal improvements in revenue and merchandise sales for the nine-month period, rising 5.4% and 4.7%, respectively, compared with 4% and 3% last year.