Despite official statistics to the contrary, there is a huge shopping spree under way in South Africa. This week, Woolworths, Edcon and Truworths all reported sharply higher sales which show that fashion is on top of consumers' shopping lists.
These sales figures will reflect in their earnings in the months to come.
Official government statistics say retail sales were up just 4% year-on-year in the three months to April.
But, while month-on-month sales were actually down, the top three retailers have all reported annual growth of 15% or more.
Consumer confidence is running high, thanks to low inflation and interest rates, and the fashion stores are ringing the tills at unprecedented rates.
South Africa's fashion splurge should also be viewed against a 1.1% fall in retail sales in the US, the sharpest such drop in 14 months. Europe is also experiencing tough retail conditions, most recently in Germany.
Sales in China reflect the growth in that economy. There, retail sales were up by 13.9% in June, bringing growth for the first six months of 2004 to 12.8% year-on-year.
Early this week, Woolworths said its sales for the year to June were up 15.3%, with excellent sales in its womenswear department, which continued to gain market share.
Truworths International said merchandise sales for the year to June grew almost 18% to reach a record R2.7-billion. Headline earnings will be 20% to 30% higher than in 2003.
Directors said the buoyant conditions that underpinned trading in the first six months "gained further momentum through the second half".
Edcon's chief executive, Stephen Ross, meanwhile, told his annual meeting this week that "the environment of low interest rates, real wage increases and improved consumer confidence was positive for all retailers during the quarter under review".
Edcon continued to gain market share.
The company's total sales for the first 14 weeks since the March year-end "exceeded internal targets and rose by 25% when compared with the same period last year".
Edgars' sales increased by 24%, while Jet's were up 28%. T hese two chains represent 90% of group sales.
Headline earnings for the first three months were "running well ahead of budget".
Ross said that headline earnings for the half-year to September were expected to be "between 60% and 80% higher" than the previous year.
Edcon stock, a pile of which were sold by SABMiller a week ago at R144, is now scaling R163.
Edcon has been the strongest share in the sector, moving up 85% in the past year.
However, the shares of Woolworths, Truworths, Mr Price and Foschini are all trading near their year highs.
Also this week, fashion group Levi Strauss, which says it has 27% of the local denim market, said it will expand operations in South Africa.
Levi's SA manufactures its clothing locally and also exports to the US.
Managing director Mike Joubert said sales were up 36% in the first six months.
Over the past year, the company has doubled the number of its Original Levi's stores to 12 and is also increasing its presence in other stores.
Publisher: Sunday Times
Source: Sunday Times
