No sport in retail’s troubles

THE sports-apparel sector is not immune to troubles facing the country’s retail industry.

It is a tough environment for consumers.

And Kevin Hodgson, CEO of Holdsport, which owns the sport apparel stores Sportsman’s Warehouse and Outdoor Warehouse, does not expect the pressure to lift in the medium term.

While the retailer’s target market was in a high-income bracket, the company was still feeling the pinch even if not to the same extent as in the lower and middle income brackets, he said.

“Our business trades best when people are in a positive frame of mind . . . when the Springboks are winning the rugby and the rand is strong and the stock market is going up and those emotions make it easier for people to shop.”

Last season was one of the worst for the national rugby team, which won only four of its 12 test matches.

And while the rand stengthened just under 2% this year, over the past five years it was 72% weaker against the dollar — putting it among the four worstperforming emerging-market currencies.

On Friday, Holdsport reported an increase in sales for its year to February, but core headline earnings declined 2.3% when excluding the effect of foreign-exchange adjustments.

Over the past 12 months, Holdsport’s shares gained a marginal 1.5%, in line with a pedestrian 3.2% climb in the JSE All Share.

Michael Treherne of Asset Management firm Vestact said that performance was far from stellar as the group’s sales growth rate was below inflation’s.

Treherne said, though, that the sport-apparel sector was in a stronger position compared with that of other more general retailers, due mainly to the consumer shift towards a healthier lifestyle.

He pointed out that while sales slumped last winter for general apparel retailers due to warmer weather, stores such as Sportsman’s Warehouse were not affected as much.

“It is a defensive sector because [consumers] want to work out and be healthy which makes [Holdsport] a nicely positioned company,” Treherne said.

Group profit after tax was down by R27.5-million on the previous year’s.

The group invested R60.3-million in maintaining and expanding operations during the year in its strategy to move into more shopping malls, said Hodgson.

But it faced challenges with these efforts because of space requirements and higher margins needed to cover costs when operating in malls.