Clothing industry in doldrums
Top outlets like Mr Price, Foschini and Stuttafords take a nosedive as consumers struggle in sluggish economy
ALTHOUGH consumer credit health appears to be improving, it is not showing in retail clothing sales.
Company results published since the beginning of this year have been disappointing, if not downright awful.
The retail clothing industry is under severe pressure as top outlets such as Edcon, Mr Price, Foschini and the troubled Stuttafords take a nosedive.
The latest casualty in the industry was Mr Price, which yesterday posted its first annual profit drop in 16 years. The company posted a 12% drop in fullyear earnings as consumers struggle in a sluggish economy.
Diluted headline earnings per share fell to 887.9c in the year to end-March, from 1 012.9 cents in the previous year.
“Consumer confidence remained low as a result of the poor state of the local economy and a lack of faith in the current political leadership’s ability to set high standards of governance and deliver inclusive growth,” Mr Price, which also sells homeware and sporting goods, said yesterday.
Last week Edcon, which targets young brand- conscious customers, said it had shut 24 of its 169 stores in a bid to save money. As of March 25, closures included eight Edgars stores, four Jet stores and five Jet Mart stores.
The retailer closed seven stores in its speciality division that includes CNA, Red Square and Boardmans.
Stuttafords, a top- end retailer of many years’ standing, hit the wall last year and applied for business rescue. Its debts are R836m owed to hundreds of creditors, including R147m to Nedbank. Stuttafords closed three stores this month, at Rosebank Mall, Canal Walk shopping centre and Clearwater Mall.
Industry experts said that as buying power shrank, households bought cheaper brands and unbranded clothes.
“Secondly, the mushrooming of foreign brands is giving consumers a wider choice, resulting in stiff competition.”
However, coming off the back of household credit data reflecting a fairly significant decline in the desire to borrow in April, the TransUnion Consumer Credit Index released for the first quarter of 2017 yesterday, reflected an improvement.
The index suggested that consumer credit health increased in the quarter to its best level since the end of 2015, but that did not suggest strong support for the retail sector as much disposable income was still channelled to paying debts rather than spending.
Azar Jammine, chief economist at Econometrix, said the improvement in consumer credit health meant that even in tough times, growth in consumer spending was not that bad.