Re­tail back on shop­ping list?

Lewis fam­ily splashes out on fash­ion re­tailer Fos­chini

Finweek English Edition - - Companies & Markets - SIKONATHI MANTSHANTSHA sikonathim@fin­

AC­TIV­ITY BY DIREC­TORS of JSE-listed com­pa­nies came close to a crawl last week, with just 20 trades re­ported. The quiet direc­tors’ week mir­rored that of the over­all mar­ket, with av­er­age daily turnover on the JSE fall­ing from R14,2bn in the first week of Au­gust 2007 to R12,9bn in the first week of Au­gust 2008.

Per­haps the low trad­ing vol­umes should come as no sur­prise as much value has also been de­stroyed over the past few months. Since its peak of more than 33 000 late in May, the JSE all-share in­dex has plunged 20% into a tech­ni­cal bear sta­tus. Bil­lions of rand were lost in the process but direc­tors of those com­pa­nies have cho­sen to watch from the side­lines. The ex­cep­tions were a few who saw buy­ing op­por­tu­ni­ties and ploughed a col­lec­tive R27m back in their com­pa­nies’ shares last week.

Fash­ion re­tailer Fos­chini non-ex­ec­u­tive di­rec­tor Mike Lewis was re­spon­si­ble for a whop­ping R20,7m of that sum. As he did the pre­vi­ous week, Lewis again put his money where his mouth is by buy­ing 570 000 shares at 3628c each. The pre­vi­ous week he paid just un­der R45m for nearly 1,3m shares. Added to the shares in Fos­chini worth R32m he bought in March, Lewis has paid close to R97m for 3m shares so far this year. That en­trenches the Lewis fam­ily as Fos­chini’s big­gest share­holder, with more than 18m shares or 7,5%.

But are re­tail coun­ters back on the shop­ping list? “There’s enor­mous value at th­ese lev­els (just un­der 4000c/share), not only in Fos­chini but in many re­tail coun­ters,” Fos­chini fi­nan­cial di­rec­tor Ron­nie Stein told Fin­week in March. He be­lieved at the time the share had bot­tomed out. But it went fur­ther down to a low of 2689c early in July be­fore re­bound­ing at the time of writ­ing to 4185c/share.

“The re­tail data you see in­di­cates re­tail­ers haven’t re­ally gone off the shelf,” says War­wick Lu­cas, eq­ui­ties an­a­lyst at Imara SP Reid. He says al­though earn­ings of fash­ion re­tail­ers aren’t ex­actly grow­ing, they clearly didn’t fall in the cur­rent high in­ter­est rate and in­fla­tion en­vi­ron­ment. “As more peo­ple be­come more af­flu­ent and join the mid­dle class they tend to be much more con­sis­tent buy­ers of clothes,” says Lu­cas. “As for furniture stocks, the mar­ket is now look­ing through the bad re­sults.” Lu­cas says food re­tail­ers were very de­fen­sive buf­fers in a high in­fla­tion en­vi­ron­ment, in that their in­ven­to­ries al­lowed for stock prof­its when in­fla­tion was high.

While on re­tail­ers, two direc­tors at food re­tailer Spar ex­er­cised their op­tions on shares granted in 1998. Group fi­nan­cial di­rec­tor Rod­ney Coe and re­tail op­er­a­tions and mar­ket­ing di­rec­tor Roelf Ven­ter paid 682c for each of their shares. Coe re­tained his 13 300 shares while Ven­ter im­me­di­ately sold his 15 900, re­al­is­ing a profit of R710 000. They still each have about 300 000 op­tions to vest, is­sued at be­tween 980c and 4622c/share.

Two of laun­dry and cos­met­ics whole­saler/re­tailer Beige Hold­ings’ direc­tors also put a col­lec­tive R4m into the com­pany’s pref­er­ence shares. Du Preez brothers AP and MM both paid 123c/share for their 3,2m prefs.

Else­where, prop­erty fund man­ager Madi­son was the next big­gest trader last week. The fund sold more than 2m “C” units in listed prop­erty fund ApexHi, os­ten­si­bly to “fund in­cen­tivi­sa­tion com­mit­ments” to Madi­son staff sec­onded to ApexHi. Madi­son direc­tors Marc Wainer and Wolf Ces­man also sit on the board of ApexHi. The av­er­age sale price of 669c/unit was among the high­est in two months but sig­nif­i­cantly down from the 825c high of Oc­to­ber 2007.

R100m buy­ing spree. Mike Lewis

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