GO, MANGO

Finweek English Edition - - Companies & markets - MICHAEL COUL­SON

WHEN I LAST WROTE ABOUT House of Busby ( Fin­week, 2 Novem­ber 2006), it was just launch­ing its first Mango shop in Sand­ton City. My fash­ion­ista spies were less than im­pressed by the ini­tial range of mer­chan­dise and there’s no ref­er­ence to how Mango is far­ing in the in­terim re­port to 31 De­cem­ber, but the SA re­tail di­vi­sion as a whole did bet­ter than ex­pected, as did the Aus­tralian dis­tri­bu­tion di­vi­sion.

The prob­lem area was the SA dis­tri­bu­tion di­vi­sions, which were hit by the de­pre­ci­at­ing and volatile rand. Busby says the re­cent more stable rand should help th­ese di­vi­sions re­turn to their nor­mal prof­itabil­ity. The Aus­tralian busi­ness con­trib­uted only 26% of rev­enue, up from just 12% a year be­fore, but gen­er­ated 43% of EBITDA, which con­firms that the lo­cal dis­tri­bu­tion busi­nesses in­deed must have had a tor­rid time. How­ever, over­all rev­enue was up 52%, op­er­at­ing in­come up 31% and HEPS up 32%, to give a rolling 12-month HEPS of 111c. Busby does not de­clare an in­terim div­i­dend: the last an­nual pay­ment was 14c. OP­POR­TU­NI­TIES • How­ever Mango fares, there’s a world­wide re­tail trend to­wards branded goods, and Busby is a leader in ex­ploit­ing them lo­cally. Un­like most SA re­tail­ers who’ve tried, Busby seems to have cracked the tough Aus­tralian mar­ket, giv­ing it an un­ex­pected sta­tus as a rand hedge stock. RISKS • The mis­for­tunes of the SA dis­tri­bu­tion busi­nesses show how vul­ner­a­ble Busby is to fluc­tu­a­tions in the rand. Brands are in­her­ently a fickle busi­ness, and Busby can’t ex­pect ev­ery brand it in­tro­duces here to do well. But as the port­fo­lio ex­pands, the ex­po­sure to any in­di­vid­ual brand di­min­ishes.

BUSBY

Source: I-Net Bridge

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