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Performing well in difficult times

May 13th 2011, 06:32

12.05.2011

Performing well in difficult times

Many business are subject to external influences that are not always purely economic. Food retailers are particularly exposed to these influences. They bare a social obligation to consumers and as a huge employer of people are often targets for those with a political agenda. As a result they cannot afford to be seen as profiteering from spiralling food prices. When you see food inflation at the levels we see now, the emotional response is to brand retailers the corporate evil. I don’t believe that this is the case and I think food retailers make a strong investment case in difficult economic times.

There is no doubt that trading conditions will remain tough for the remainder of the year. However food retailers hold a distinct advantage over their counterparts in other industries that are more exposed to negative economic developments. Provided consumers can still afford to buy food they will be in a strong position to “manage their margins”.

Spar makes an even more attractive package. Although labelled as a food retailer, in actuality they are more like a food distribution business or a wholesaler, they benefit from a high inflation environment without the issues associated with employing store personnel.

Click here to read Moneyweb’s investment case for Spar

Craig Ballantyne


Please feel free to make comments or raise new issues by emailing the editor

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