Advertise with fastmoving.co.za
 
 

South Africa's lacklustre economy, coupled with high unemployment, low business, and consumer confidence, is curbing household spending and wiping off billions in value for some of the country's listed retailers.
South Africa's lacklustre economy, coupled with high unemployment, low business, and consumer confidence, is curbing household spending and wiping off billions in value for some of the country's listed retailers.

Stock weakness hits most of SA's listed retailers hard

ECONOMIC NEWS

By Dineo Faku - Oct 2nd, 08:23

South Africa's lacklustre economy, coupled with high unemployment, low business, and consumer confidence, is curbing household spending and wiping off billions in value for some of the country's listed retailers. 

Massmart, which operates brands such as Game, Builders Warehouse and Makro, has lost 58.37 percent on the JSE in the year to date.

Shoprite, Africa’s biggest food retailer, has fallen 35.68 percent during the period, while Pick n Pay has weakened 12.39 percent and Spar has fallen 7.78 percent.

Clothing retailer Truworths has lost 39.82 percent, Mr Price has slashed 35.55 percent off its value, and The Foschini Group has lost 1.84 percent.

Woolworths remains 0.05 percent higher in the year to date, despite its problems, while Clicks has strengthened by 12.71 percent in the year to date.

Lester Davids, trading desk analyst at Unum Capital, said the weakening rand, which hit R15.20 to the US dollar, had contributed to the weakness of retail stocks.

“This raises the prospects for higher inflation, which in turn may restrict the ability of the SA Reserve Bank from easing monetary policy, which then restricts the consumer's buying power,” Davids said, adding that the petrol price hike due tomorrow night may put the consumer under further pressure.

“These shares continue to trade on valuations which are relatively high in the context of the economic backdrop, including high unemployment, a weaker rand, and uncertainty around economic prospects.”
The retail sector's year to date performance has been weak, mirroring South Africa's ailing economy.

Peter Takaendesa, a portfolio manager at Mergence Investment Managers, said that while the big underlying factor for the low retail stocks had been a weak economy, the retail sector had suffered more from increasing competition, resulting in ongoing product discounting, despite increasing cost of imported merchandise or raw materials.

The rand remained soft to close at R15.1618 against the US dollar yesterday, after breaking through the R15.10 technical levels on Friday.

The gold price fell sharply by 5.55 percent to $1486.34 an ounce on the widening US-China trade war.
Harmony Gold fell 3.28 percent, AngloGold Ashanti was 1.45 percent lower and Gold Fields was 2.16 percent weaker.

The Gold Mining Index declined 1.62 percent to 2 253.71 points.
IOL 

Related News

Woolworths carves out market share in SA
27/11/2019 - 10:11
In Australia, David Jones's sales declined 2.1%, with the company saying a store refurbishment contributed to the decline.

Push and pull strategies work together to keep consumers coming back for more
26/11/2019 - 10:20
The retail sector is under increasing pressure as consumers have shrinking disposable income in a strained economy. Maintaining share of wallet is critical. Relying solely on a push route to market strategy from manufacturers into retailers is not enough to get consumers buying products. A pull strategy needs to coexist with the push to drive brand consumption. Integrating these strategies requires intelligent and insightful decision-making. This, in turn, requires data generated through smart technology which provides line of sight across the value chain from manufacturer to distribution, retailer to the consumer.

Exclusive leases must fall: Commission cracks whip on Shoprite, Pick n pay, Spar, Woolies
26/11/2019 - 09:57
The Competition Commission Inquiry into Grocery Retail, published on Monday, called for an end to the exclusive leases negotiated by national retail chains in all shopping malls across the country in a bid to open up access to markets for smaller players.

Today’s customers are loyal to speed and convenience, not brands
25/11/2019 - 11:15
Consumer expectations are rapidly shifting as technologies such as mobile, geolocation, social media and increasingly, Internet of Things devices and wearables, connect people to a world of easily accessible information and convenient services. With the ability to browse, compare and order with a few swipes and taps, consumers are becoming trained to value convenience and service above nearly anything else.

Gearing FMCG manufacturing for the red season spike and maximising profits all year round
25/11/2019 - 11:03
As we enter the festive season, demand for Fast-Moving Consumer Goods (FMCG) increases rapidly, often leaving manufacturers scrambling to fulfill orders from their distribution channel. If demand cannot be met, then loss of revenue is inevitable. However, over-production is not an ideal solution either, as it can leave manufacturers sitting with unsold stock that costs money to store.