Truworths slides most in four years
IOL Business/ Bloomberg News - Nov 11th 2013, 09:16
Johannesburg - Truworths International Ltd., South Africa’s largest listed clothing retailer, fell the most in more than four years as inflation curbed consumer spending and slowed its sales growth.
The stock slid 8.1 percent to 85 rand by the 5 p.m. close in Johannesburg, the biggest decline since November 2008.
Truworths was the worst performer on the 11-company FTSE/JSE Africa General Retailers Index today.
South African consumer confidence reached a 10-year low in the three months through September as inflationary pressures curbed spending and demand for credit.
Truworths sales for the 18 weeks through November 3 rose 7 percent to 3.5 billion rand ($341 million), compared with a 15.9 percent increase a year earlier, the Cape Town-based company said today in a statement.
Credit sales accounted for 71 percent of revenue, with like-for-like store sales rising 2 percent.
“It’s becoming increasingly difficult for credit retailers,” Roger Tejwani, a retail analyst at NOAH Capital Markets, who has a sell recommendation on Truworths, said by phone from Cape Town.
“Their debtor costs have grown and they are facing increasing competition from international brands.”
Foschini Group Ltd., South Africa’s worst performing clothing retail stock this year, which sells about 60 percent on credit, fell 3.5 percent to 108.11 rand.
Retail sales in the six months through September rose 9 percent to 6.7 billion rand rand, Foschini said in a statement today.
“The difficult credit environment is unlikely to improve in the second half of the year due to the high level of consumer indebtedness,” it said.
Truworths shares have dropped 22 percent this year, while Foschini has declined 23 percent.
The FTSE/JSE Africa All-Share Index has rallied 17 percent. © Independent On-line 2013. All rights reserved.
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