Cloth­ing in­dus­try in dol­drums

Top out­lets like Mr Price, Fos­chini and Stuttafords take a nose­dive as con­sumers strug­gle in slug­gish econ­omy

Afro Voice (Free State) - - INSIDE1 - BERNARD SATHEKGE bernards@the­newage.co.za

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.

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