Lewis Group leads retailers higher
RETAILERS jumped to a record, led by Lewis Group, as a lower oil price eases pressure on the Reserve Bank to raise interest rates.
“Rates can stay low for longer simply because the oil price has fallen steeply,” Sasha Naryshkine, an investment manager at Vestact, which oversees more than R2.1 billion, said on Friday.
“That just puts money in consumers’ pockets almost immediately.”
The FTSE/JSE general retailers index gained 1.2 percent. Lewis, the second-largest South African furniture retailer, climbed 7.4 percent to R75.32 by 3.32pm on Friday, the highest since September 2012. It closed 8.34 percent higher at R76. The company’s larger competitor, JD Group, closed up 7.69 percent at R28 and Mr Price, which sells most of its clothing and housewares for cash, was up 3.12 percent up at R244.50 at the close of JSE session on Friday, an all-time high.
Oil has collapsed into a bear market amid a supply glut, with Brent falling to below $80 (R884.70) a barrel. That is improving the outlook for inflation in South Africa, which relies on imports for 70 percent of its crude needs.
“Some of the local retailers, their sales updates haven’t been that bad,” Naryshkine said. “If this is the worst of it then you would think it would probably start getting better from there.”
Mr Price, which releases a full results report today, said on October 23 that fiscal first-half earnings a share before onetime items rose as much as 24 percent. Lewis said on November 10 that a slowing increase in debtor costs and the end of strikes in South Africa might reflect a stabilising credit environment and boost sales. – Bloomberg