TRUWTHS: 7,093 -88 (-1.23%)
Holiday sales help South Africa's TFG buck retail weakness
By Nqobile Dludla
JOHANNESBURG, Jan 17 (Reuters) - South Africa's TFG (The
Foschini Group) said Black Friday sales and good trade across
its business in December helped fuel nine-month turnover growth
of 22.7 percent, providing some cheer for the retail sector
after grim news from Woolworths and Mr Price.
An increase in value-added tax, a rise in unemployment and
inflation levels, coupled with higher fuel prices and an
interest rate increase in November have all conspired to reduce
spending power in South Africa.
TFG, which sells clothing, furniture and homeware,
jewellery and cosmetics, bucked the weaker trend for retailers
in the country through its broad offering and appeal to the
Department store operator Woolworths reported
slower half-year sales growth and issued a profit warning,
sending its shares down as much as 9 percent after disruption
from transforming its Australian business David Jones and a
significantly smaller winter clearance sale in the first
Meanwhile cash-strapped low and middle-income earners spent
less on clothes at budget retailer Mr Price. It posted
a sharp slowdown in third-quarter sales growth, sending shares
down 16.7 percent.
"It's a mix bag of numbers that we're getting," Cratos
Capital equities trader Greg Davies said.
"You have Woolworths which has the most expensive stuff and
nobody went shopping there and then you have Mr Price where you
think that maybe people couldn't afford Woolworths so they went
to Mr Price, but they didn't go there either."
"So it shows that the top and the bottom ends are
struggling" he added.
TFG Africa posted same store sales growth of 6.3 percent in
the nine-months ended Dec. 29, while TFG London's comparable
sales grew 3.5 percent and 15.6 percent in TFG Australia.
Sales for December increased by 8.3 percent, the owner of
@Home furniture and homeware retailer added.
"The impact of Black Friday, in pulling forward what would
have traditionally been December sales, is becoming more
pronounced, especially in certain merchandise categories such as
cosmetics and jewellery," the firm said in a trading update.
Shares in TFG turned positive after its sales figures,
rising 3.24 percent.
Later on Thursday peer Truworths International Ltd
said group retail sales for the half-year ended Dec.30 grew by 2
percent to 10.5 billion rand and it expected diluted headline
earnings per share to drop between 5 and 7 percent.
Some retailers had a breather in November as South African
retail sales climbed 3.1 percent in that month as consumers
enjoyed the sales opportunities presented by Black Friday.
(Reporting by Nqobile Dludla
Editing by Alexandra Hudson)
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