Brait’s share price plummets
CHRISTO Wiese’s business acumen hasn’t managed to rub off on Brait’s share price, which has plunged 61% since peaking in April last year.
Last week the share tumbled 9% to R59.01 after the company released its results, but the stock recovered to end the week marginally firmer.
Wiese, who has a 35% stake in the company, is hitching his hopes on China and Australia to save the group after Brait’s investments in the UK did not perform very well.
Brait increased its exposure to the UK in 2015 when it snapped up Virgin Active and clothing retailer New Look.
But Brexit, which forced the group to abandon plans to move its head office to the UK, made things difficult.
Weak retail sales, coupled with low levels of economic activity in South Africa, have also become a drag for the group.
The group this week reported a R15.9-billion loss for the year to end-March 2017.
This can mostly be attributed to poor performance in Brait’s primary markets, South Africa and the UK.
The situation in the UK is not improving. On Thursday data showed retail sales plunged by 1.2% – more than the 0.8% expected – for May. This was the second decline in three months as an uptick in inflation curbed consumer spending.
South Africa’s retail sector showed an increase of 1.5% in sales in April despite data suggesting the country had entered a recession in the first quarter.
Wiese said he was not sure how long the weak consumer environment would last. New Look was not alone, he said; retailers across the board in the UK were experiencing tough conditions.
“The company is doing a lot of things to mitigate a further loss. Where you can’t change the conditions, you can only adapt to them and make sure you do the right things,” Wiese added.
New Look, which has 592 stores in the UK, accounts for 15% of Brait’s current investments. Brait is now expanding the number of its stores in the Asia Pacific region to bolster its business. New Look, which first opened a store in China in 2014, plans to open between 50 and 100 New Look stores this year, an analyst said.
While Virgin Active closed 37 UK clubs in 2016 and 14 UK racquet clubs were sold in 2017, it opened 26 new clubs across South Africa and the Asia Pacific region in 2016.
Wiese said the consumer market in Asia and Australia was definitely better off.
He is targeting this market in the hope that the slump in consumer spending elsewhere in the world will not spread to this region.
“We will do whatever is required and whatever makes sense to drive our top line. Australia and China did not have a Brexit vote,” he said. — TMG