ALISTAIR ANDERSON

FOSCHINI, SA’s second-biggest listed apparel retailer, suffered a 6,3% loss in profit for the year to March due to lower consumer demand and volatile market conditions, but the group was upbeat yesterday about its prospects for the future.

The group, which includes Foschini and Markhams stores, expected trading to be buoyed by lower inflation and interest rates. The World Cup was also expected to boost consumer spending.

“This financial year has been difficult and volatile with consumer spending worsening during the second half of the year, particularly in the mass middle market space,” the group said.

The group said the decrease in interest and inflation rates had not yet translated into increased consumer spending. “We are very reliant on such a general economic measure as consumption, because our customer base is mainly middle class, and post recession this measure has been slow,” CEO Doug Murray said.

Stanlib economist Kevin Lings said consumer spending or household expenditure was traditionally the slowest economic component to rebound after any recession.

“Having had retail sales return to positive territory, I think the fever to buy things during the World Cup and help from tourists should help clothes retailers,” he said. However, he said debt would still be something consumers “needed to keep their eyes on”.

The dent to profit meant that headline earnings per share decreased 6,8% from 559,5c to 521,4c in the previous year. The group believed its balance sheet was strong enough for it to declare a final dividend of 170c per share for the year and still be able to open stores in the near future.

Murray said the effect of increases in electricity on his customers’ disposable income was unknown, but was a factor that would have to be considered.

andersona@bdfm.co.za