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Finweek English Edition - - Companies & markets - ANA MON­TEIRO anam@fin­week.co.za

WHAT BET­TER WAY for man­age­ment to sig­nal faith in a com­pany’s prospects than to buy? This is what direc­tors at House of Busby have done, tak­ing their col­lec­tive in­ter­est (di­rect and in­di­rect) in is­sued share cap­i­tal from 51,6% to 56,55% in the year to end-June 2006, ac­cord­ing to its latest an­nual re­port.

Brothers and House of Busby founders Keith and David Brouze were most ac­tive; CEO Keith upped his in­di­rect in­ter­est in the com­pany by 23,8% to 18,8m shares, while non-ex­ec­u­tive di­rec­tor David in­creased his in­ter­est by 12% to just un­der 12m shares. It was only Busby Re­tail MD Martin Duarte who re­duced his hold­ing from 3,82% to 2,62%.

While at­ten­tion tends to be fo­cused on larger re­tail­ers such as Edgars Con­sol­i­dated Stores (Ed­con) and Wool­worths, House of Busby has been qui­etly build­ing a small em­pire away from the lime­light.

Hav­ing listed in 1997 (and the re­sult of a merger be­tween Busby Leather­goods and Hand­bags In­ter­na­tional), House of Busby has grown into a whole­saler and re­tailer op­er­at­ing in both SA and Aus­tralia, sell­ing eye­wear, footwear and cloth­ing by a num­ber of in­ter­na­tional houses lo­cally.

Re­cent ad­di­tions to the brands stable all ap­peal to the well-heeled; they in­clude footwear and ac­ces­sory re­tail­ers Nine West and Aldo, and most re­cently, Span­ish cloth­ing re­tailer Mango.

With Nine West, the open­ing of the Nel­spruit, Som­er­set West and Bloem­fontein branches took the to­tal num­ber of out­lets to 14.

Aldo is one of the new­est brands in the com­pany and there are ag­gres­sive roll-out plans for the brand, with 11 stores aimed to be up and run­ning by 2007 and 16 by 2008.

The flag­ship store for ladieswear re­tailer Mango opened at Sand­ton City shop­ping cen­tre in 2006; stores are be­ing planned for Dur­ban, Pre­to­ria and Cape Town.

Ever- present con­cerns that re­tail­ers will ex­pe­ri­ence a slow­down due to the Re­serve Bank’s at­tempts to rein in con­sumers have not man­i­fested into prob­lems for Busby. A trad­ing up­date for the first six months of busi­ness (to end-De­cem­ber 2006) show the com­pany ex­pects earn­ings and head­line earn­ings per share to be be­tween 30% and 40% higher than that for the same pe­riod in 2005.

Keith Brouze noted that rand weak­ness has ex­erted mar­gin pres­sure on the dis­tri­bu­tion side of the busi­ness, but that this his­tor­i­cally does not have an ef­fect on the ac­ces­sories side. Brouze wrote: “For­tu­nately, it seems that when the rand goes down, the cus­tomers dress up!” And with tourism be­ing sig­nif­i­cantly boosted by a weaker ex­change rate, this trans­lates into a “pleas­ing ef­fect” on the com­pany’s lug­gage stores. “We look for­ward to the 2010 World Cup, which prom­ises many lu­cra­tive op­por­tu­ni­ties in lug­gage,” said Brouze.

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