SA Apparel Retail | A Closetful of Concerns
The apparel retail environment locally and globally has become increasingly challenging. The systemic shift of power from the retailer to the consumer has become evident in global heavy weight results like H&M and Inditex. Growth has slowed from double digit to low single digits. The intense competition, consumers' demand for value fashion and the consumers' changing demands are what retailers contend with. Locally, weak SA consumer consumption has affected apparel retailers. The outlook turned from positive at the start of 2018 to negative due to rising inflation, pressure on the disposable income, depreciating ZAR, job losses and limited wage growth. The probability of an interest rate hike is still low. Therefore, we expect credit sales growth to improve due to a weak comparable base and easier affordability requirements. In this report we analyse the health of the SA consumer, the impact of the debt intervention bill on credit retailers, the competitive landscape and the most recent results/trading updates of apparel retailers.
Foschini Group is an investment holding company. Through its retail operating divisions - the @home, Exact!, the Foschini division, the Jewellery division, Markham and the Sports division; Retail Technology Division, TFG Design Centre; TFG Merchandise Procurement; and TFG Financial Services - retail clothing, jewellery, accessories, cosmetics, sporting and outdoor apparel and equipment, and homeware and furniture to the middle-income group throughout southern Africa. The RCS Group, an operationally independent consumer finance business that provides a range of financial services under its own brand in South Africa, Namibia and Botswana.
Mr. Price is engaged in the business of omni-channel retail distribution through 1 150 corporate-owned, 15 franchised stores in Africa and its online channels. Co.'s retail chains focuses on clothing, footwear, sportswear, sporting goods, accessories and homewares. Co. operates three reportable segments: The Apparel segment retails clothing, sportswear, footwear, sporting equipment and accessories; The Home segment retails homewares; and The Central Services segment provides services to the trading segments including information technology, internal audit, human resources, group real estate and finance.
Truworths International is an investment holding company. Co. is engaged in management. Through its subsidiaries, Co. is engaged, either directly or through franchises and agencies, in the retailing of fashion apparel and related merchandise. Co.'s brands include: Outback Red, Truworths Casualwear, Truworths Jeans, Ginger Mary, Finnigans, Truworths Collection, Essence, Truworths Glamour, Zeta, Intrigue, Skiny, Peep, Lucia Rosati and Truworths Maternity. Co. principally operates in southern Africa.
Woolworths Holdings is a retail company. Co.'s divisions include: Woolworths South Africa, David Jones (DJ), and Country Road Group (CRG). The Woolworths South Africa division is a retailer offering private label products. Co.'s offering include a range of clothing and general merchandise, food products, and financial services. The DJ division is a premium department stores. Co.'s offering include a range of private label brands in women's-wear, men's-wear, shoes, accessories, beauty, children's-wear, home furnishings, general merchandise and food as well as financial services. The CRG division is an apparel retailer. Co.'s offering include apparel, accessories, footwear and home-ware.
Avior is a globally recognised capital markets research and trading firm, with the broadest research coverage within the region, with 100+ SA and 20+ SSA companies under coverage. Avior services clients from offices in London, Cape Town and Johannesburg.
Our research quality is consistently recognised in local and global surveys, with 18 analysts currently rated in their respective sectors (FM 2017). Value add through in-depth, innovative, high quality and consistent research with comprehensive underlying fundamental modelling supported by regular analyst and roadshow interactions.
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