Supré teen fashion brand on way to SA

AUSTRALIAN retail chain Cotton On Group will expand its presence in South Africa by opening outlets of its youth fashion brand Supré from next month.

A statement issued this week said Supré planned to open three stores: in Cavendish Square in Cape Town, at Centurion Mall and in Menlyn Park in Pretoria.

Other brands in the group are Cotton On Kids, Cotton On Body, Factorie and shoe and accessory retailer Rubi.

Cotton On currently has 168 stores in South Africa and three in Namibia, but the retailer’s expansion strategy may fuel tensions between local and international players.

Of the three major international retailers in South Africa, Cotton On has been the most aggressive in terms of store roll-out.

Swedish retailer Hennes & Mauritz (H&M) has opened seven stores over the past year and Spanish retailer Zara has eight stores.

An analyst who did not want to be named said: “Given the current environment where you’ve got zero growth and credit growth going backwards in a consumer space, what you have is a pie that is not growing and more people trying to eat from that pie.”

According to Statistics South Africa, retail sales for June this year missed market expectations, growing 1.7% year on year. In May sales grew 4.5%.

Low-end retailers like Mr Price have felt the sting from global players. Its share price fell sharply on August 31 when it released results for the 18 weeks to August 6 and warned of a potential drop in half-year profits.

The company reported a 1% year-on-year increase in retail sales for the period. Mr Price on Tuesday will hold an investment call to discuss issues such as its declining market share.

“Investors are looking for reassurance from management that even though the environment is much tougher, it is not broken,” the analyst said.

“They [Mr Price] have just made some poor choices and paid a lot for them, because it’s been in an unforgiving environment.”

Mr Price is not alone. Edcon has also been losing market share, a trend the analyst said was likely to continue at least for the next couple of months.

“[Until] some of the changes that [CEO] Bernie Brookes has put in place start to take effect . . . you’ve got kind of a perfect storm,” the analyst said.