Retail Sales Growth

 

There was a slowdown in retail sales for the month of June 2013 compared to the previous year, thereby reflecting that the consumer is under preasure. Retail trade  sales measured in constant (2012) prices increased by 1, 9% year on year (y/y) in June 2013 from a revised 6% (6,2%) increase in May 2013.

The best performers where the hardware, paint and glass showing a 5.3% increase whereas other retailers such as clothing, textiles, footwear and leather goods showed a 4.3% increase

   

 Analysts’ views

Futures business analyst and CEO of Master Retailing Eugene Beukes is of the view that shareholders are to act with caution when dealing in securities related to the furniture industry as there is a shake up on the horizon. Some of the big players are either busy with restructuring, consolidation and then there is also the recent announcement by Leon Kikinis CEO of ABIL that Ellerine Furniture (EHL) has eventually been put up for sale.

Eugene states that he doesn't believe a buyer for the ailing retailer EHL would necessarily come from the likes of JDG, Massmart, Lewis or Shoprite/Checkers due to the competitions board and, therefore believes that the only way ABIL can possibly dispose of EHL in current economic conditions will either be through international investors or by having to break up the various individual brands i.e Wetherlys, Furniture City and possibly Dial n Bed, whereas the remainder of the brands would most probably have to be sold as a package deal i.e Ellerines, Bears, and Geen & Richards together. Eugene states that he doesn't think the new brand introduced in 2010 Chateau d' Ax  will be up for sale as this was doomed from the start, and has never showed traction in the market. Prior to 2010 Bakos Brothers started reducing their exposure in this segment after 20 years which should tell you something, why did EHL then try to enter this similar market with a big bang approach before first testing the market?

§     Retail trade sales were expected to have increased by 2,8% y/y ‚ according to a survey of leading economists by BDlive.

§     Forecasts among the nine economists polled ranged from 1,1% to 4, 5%.

§     "This comes as no surprise. The 1,9% came off a high base. The latest retail figures are also constant with what we are seeing in the economy at the moment," Nedbank economist Isaac Matshego said. Spending by consumers is expected to moderate in 2013, given continued high debt levels and high joblessness.

§     "The latest figures are coming off a high base, but the overall picture remains one of aconsumer that is under pressure. The cost of living has been rising. Petrol prices are high," said KADD Capital economist Elize Kruger.

Source:

Business Day, dated 14 August 2013

Eugene Beukes (CEO Master Retailing), interviewed 14 August 2013