Retail back on shopping list?
Lewis family splashes out on fashion retailer Foschini
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