KGOMOTSO MATHE

FOSCHINI group said yesterday the expected upturn in the economy was not yet evident as retail trading conditions remained tough and consumer spending remained under pressure.

The clothing and jewellery retailer reported an increase of 7,9% in turnover to R4,1bn for the six months to 30 September. Same-store turnover grew 1,2%, while product inflation averaged about 8% for the period.

“Trading conditions in the first half of this year have been difficult and volatile, displaying no consistent pattern,” said group CEO Doug Murray.

“The retail environment was expected to continue to be difficult for the remainder of the year.”

But he said he expected that some relief from the interest rates cuts and inflation decreases would start to show in the first half of next year.

Credit sales as a percentage of total sales increased to 63,7% from 63,2% in the previous corresponding period.

Absa asset management analyst Christopher Gilmour said the results showed that there was no growth in the market. “Consumer spending may have taken a turn for the worst. What these figures are telling us is that consumers are really under pressure,” he said.

Diluted headline earnings per share increased 1,8% to 231,9c per share from 227,7c per share and headline earnings per share increased 1,5% to 232,9c.

Operating margin for the period reduced to 21,9% from 22,2% and the interim dividend was unchanged at 118,0c per share. Sales in the clothing division increased 11,2%, jewellery declined 3%, cosmetics grew 16,9%, houseware was up 18,9% and the most disappointing was the decrease in cellphones of 13,4%.

The group said clothing and jewellery were satisfactory and acceptable.

The cellphone division was affected by supply problems which left the division understocked. The Regulation of Interception of Communications Act had also been “challenging” to implement.

However, Foschini maintained that its trading divisions were in good shape and were well positioned to maximise any upturn in the economy. Foschini brands include @home, exact, Foschini, American Swiss, Sterns, Matrix, Markham, Totalsports, sportscene and DueSouth.

“We remain focused on long-term growth, and to position us well for the retail recovery we are continuing to open new stores in certain of our formats that are under-represented,” said Murray.

The group, which has a total of 1597 stores, opened 58 stores during the period under review and a further 40 are planned for the second half of this financial year.

Analysts have forecast a 7,5%

mathek@bdfm.co.za