Advertise with fastmoving.co.za
 
 

A lack of confidence in the market and the economy will keep spending slow.
A lack of confidence in the market and the economy will keep spending slow.

Retailers may breathe easier in fourth quarter, say analysts

ECONOMIC NEWS

By Colleen Goko - Aug 10th 2017, 09:11

While there is no outright good news for retail, analysts say the last quarter of 2017 is unlikely to plunge the sector to new lows. 

"The interest rate cut and lower inflation numbers should see conditions improve for consumers on the balance," said Old Mutual investment professional Meryl Pick.

"There may be a lag and the improvement could be muted, to begin with. We may see a marginally better fourth quarter compared with last year."

The South African Reserve Bank surprised markets with an interest rate cut of 25 basis points in July. In the same month, inflation fell to its lowest level since November 2015.

Inflation, as recorded by the consumer price index, dipped to 5.1% in June, from 5.4% in May.

Pick said despite this encouraging data, retailers had indicated that trading conditions would remain tough for the rest of 2017.

Cratos Wealth portfolio manager Ron Klipin said there was good news for retail shares at their current prices.

A year ago, Pick n Pay’s share price was trading at about R80.76. The share currently trades at about R62.84.

Mr. Price Group was at about R228.50 but has since fallen to about R175.66.

"Looking at retail counters, prices are becoming more attractive and may see some buying because of the value they offer at these prices. But the conditions in the sector itself aren’t great," said Klipin.

Klipin said there was a lack of confidence in the market and the economy, while household incomes were under pressure.

"There are a lot of pluses and minuses and anything could change the balance. There is still a possibility for a downgrade, but the lower level on inflation appears to be a positive aspect."

In clothing retail, Pick and Klipin said Mr. Price Group and TFG were best placed to survive the economic environment.

In food retail, Klipin said Shoprite would fare best, being affordable for most consumers. The retailer’s African operations would also help support it.
© BusinessLIVE MMXVII 

Read more about: sales | retail | inflation

Related News

Ackermans launches ‘Moms4Moms’ educational platform to give mothers a helping hand
16/09/2019 - 14:03
According to a 2017 Statistic South Africa report, 61% of South African children are raised by only their mothers. This reveals that the majority of South African women have to navigate single-parenthood, as well as being the sole provider for their families.

Rhodes Food Group's turnover rises amid healthy international growth
16/09/2019 - 11:14
The international turnover of Rhodes Food Group, which makes Bull Brand corned meat and Bisto gravies, rose 13.4% in the 10 months to end-July, boosted by a weaker rand and exports of fruit snacks to the US.

The changing UX and CX landscape
13/09/2019 - 16:16
An exceptional customer experience (CX) builds a foundation of loyalty and trust. Similarly, a positive user experience (UX) encourages brand connections with people wanting to come back for more. And yet, local organisations must learn to embrace these more effectively to differentiate themselves from their competitors.

Footgear gets go-ahead to buy Edcon's footwear brands
13/09/2019 - 09:24
Footgear, the South African retailer of branded and non-branded footwear, on Thursday received the green light to purchase the assets and business associated with Edcon Limited’s Edgars Active and High Key brands.

Ackermans launches A-list Summer collection
12/09/2019 - 11:08
With winter’s icy grip on the country, it's hard to believe that summer is around the corner. The onset of warmer days means that it’s almost time to ditch the winter wardrobe and embrace a lighter, brighter one. However, selecting a summer wardrobe can be a daunting experience, as consumers are spoilt for choice and simply don’t have the time to sift through the top trends - particularly when on a budget.