Financial Mail : 2020-07-02



Truworths SELL Target price: Potential upside: R40.06 16.4% * Based on analysts’ consensus forecast Woolworths HOLD Target price: R34.77 Potential upside: 5.3% * Based on analysts’ consensus forecast TFG HOLD Target price: R103.28 Potential upside: 55.5% * Based on analysts’ consensus forecast learn not to rely largely on one source. It differs by division, but Miladys and Sheet Street, for example, source far more locally than they do offshore. Mr Price argues that if it could rely solely on local suppliers, it would. The problem is that SA’S manufactur­ers are technicall­y limited compared to their peers elsewhere, says Mr Price. What is sourced overseas, it says, often is what creates fashion differenti­ation among the retailers. It’s clear from Mr Price’s latest results that growth was slowing even before Covid struck: revenue from continuing operations rose just more than 2.1% to R23bn, and headline EPS fell 10.4% to 1,047c. In its post-year-end trading update, it says consumers continue to favour cash transactin­g. In May and June combined, cash sales rose 16.7% while credit sales dropped 9.4%. Online sales rocketed 90.1% from April 1 to June 20, but Mr Price is reluctant to call a permanent shift in shopping behaviour, based on the stats. Like other retailers, the group is targeting a higher percentage of “variable” rent, where part of the rent paid is based on turnover. New store openings will be small to medium in size and the average space has been cut. Happily, says Blair, few stores are loss-making. But the company has to make some fairly deep cuts anyway, and aims to slash R300m from its cost bill, largely through job cuts. The group is also planning on changing its logo back from MRP to Mr Price — which, it says, has 34 years of trust, fashion and value built into it. Brait share price (c) – weekly 3,000 2,500 2,000 1,500 1,000 500 x . financialm­ 45 July 2 - July 8, 2020

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